Board of Directors’
Report
Auditor’s Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
1
BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2021
BOARD OF DIRECTORS’ REPORT
AND FINANCIAL STATEMENTS
REPORTS FOR THE YEAR 2021
WWW.SAMPO.COM/YEAR2021
CONTENTS
Board of Directors’ Report for 2021 ..............
SampoGroup .....................................................
Outlook .............................................................
Outlook for 2022 ...........................................
The major risks and uncertainties for
the Group in the near-term
.............................
Dividendproposal ..............................................
Operatingenvironment .......................................
Businessareas ..................................................
If ................................................................
Topdanmark ................................................
Hastings .....................................................
Mandatum ..................................................
Holding ......................................................
Financialstanding.............................................
Group solvency ..........................................
Financial leverage position ...........................
Ratings .......................................................
Otherdevelopments ........................................
Disposal of Nordea shares ...........................
Hastings acquisition ....................................
Share buyback programme ..........................
Eects of COVID-19 on Sampo Group ............
Sharessharecapitalandshareholders ................
Shares and share capital ...............................
Authorisations granted to the Board ..............
Shareholders ...............................................
Holdings of the Board and Executive
Management ..............................................
Governanceandrelatedissues ..........................
Governance ................................................
Annual General Meeting ..............................
Sustainability ..............................................
Risk management ........................................
Remuneration .............................................
Changes in Group structure .........................
Changes in Group Management ....................
Personnel ...................................................
Eventsaftertheendofthereportingperiod .......
Keyfigures .......................................................
Calculation of the key figures .......................
Group’s IFRS Financial Statements ...........
Statementofprofitandothercomprehensive
incomeIFRS ...................................................
ConsolidatedbalancesheetIFRS .......................
StatementofchangesinequityIFRS .................
StatementofcashflowsIFRS ...........................
Group’s notes to the financial statements
Summaryofsignificantaccountingpolicies ........
Segmentinformation .......................................
Materialpartly-ownedsubsidiaries .....................
OthernotestoGroup’s
financialstatements– .................................
Sampo plc’s Financial Statements ...........
Sampoplc’sincomestatement .........................
Sampo plc’s balance sheet ...............................
Sampoplc’sstatementofcashflows ...............
Sampo plc’s notes to the financial
statements
....................................................
Summaryofsignificantaccountingpolicies .......
Notestotheincomestatement– ..................
Notestotheassets– ..................................
Notestotheliabilities– ............................
Notetotheincometaxes ............................
Notestotheo-balancesheetliabilitiesand
commitments– ........................................
Notestothestaandmanagement– ........
Notetothesharesheld ...............................
Approval of the Financial Statements
and the Board of Directors’ report
...........
Auditor’s report ............................................
Independent auditor’s report on
the ESEF consolidated financial
statements of Sampo Oyj
...........................
Board of Directors’
Report
Auditor’s Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
2
BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2021
BOARD OF DIRECTORS’ REPORT
Sampo Group ....................................................
Outlook ..............................................................
Outlookfor ................................................
Themajorrisksanduncertaintiesfor
theGroupinthenear-term ..................................
Dividend proposal ...........................................
Operating environment ..................................
Business areas ................................................
If .....................................................................
Topdanmark .....................................................
Hastings ..........................................................
Mandatum .......................................................
Holding ...........................................................
Financial standing ........................................
Groupsolvency ................................................
Financialleverageposition ................................
Ratings ............................................................
Other developments .....................................
DisposalofNordeashares .................................
Hastingsacquisition ..........................................
Sharebuybackprogramme ................................
EectsofCOVID-onSampoGroup ................
Shares, share capital and shareholders .....
Sharesandsharecapital ....................................
AuthorisationsgrantedtotheBoard ...................
Shareholders ....................................................
HoldingsoftheBoardand
ExecutiveManagement .....................................
Governance and related issues ...................
Governance .....................................................
AnnualGeneralMeeting ....................................
Sustainability ...................................................
Riskmanagement .............................................
Remuneration ..................................................
ChangesinGroupstructure ...............................
ChangesinGroupmanagement .........................
Personnel ........................................................
Events after the end of the
reporting period
.............................................
Key figures .......................................................
Calculationofthekeyfigures .............................
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
3
BOARD OF DIRECTORS’ REPORT 2021
Sampo Group
Sampo Group’s core business, P&C insurance had an
excellent year and achieved an underwriting result of
EUR 1,282 million (967) in 2021, representing year-on-
year growth of 32 per cent. Adjusting for the Hastings
acquisition and reported COVID-19 effects, underwriting
profit growth was 19 per cent. The Group combined ratio
improved by 2.0 percentage points year-on-year to 81.4
per cent (83.4). Excluding reported COVID-19 effects, the
combined ratio improved by 2.7 percentage points to 83.1
per cent (85.7). Organic premium growth of 6 per cent
combined with the acquisition of Hastings drove a rise in
premiums to EUR 7,644 million. The result is well ahead
of Sampo Group’s 2021–2023 annual financial targets of
mid-single digit per cent growth on average in underwrit-
ing profits and a combined ratio below 86 per cent.
If P&C reported an underwriting profit of EUR 891 million
(802) and a combined ratio of 81.3 per cent (82.1) for 2021.
The result was supported by a solid 4.3 per cent currency
adjusted premium growth and strong underlying
performance. Premium growth over the year has been
broadly based across If’s business areas, but particularly
strong in Commercial and Industrial, which continued to
see significant rate increases. Currency adjusted premium
growth in Private was also robust at 3.7 per cent for the
year, despite a sharp decline in Swedish new car sales
during the second half, as retention remained excellent
at around 90 per cent. Excluding the impact of large
losses and severe weather, run-off gains and COVID-19
effects, If’s risk ratio improved by 1.2 percentage points
year-on-year, on the back of rate increases and enhanced
risk selection, among other factors. Profit before taxes
increased to EUR 1,077 million (901).
Topdanmark’s profit before taxes for 2021 amounted in
Sampo Group’s profit and loss account to EUR 346 million
(167). The combined ratio improved to 82.3 per cent (85.2).
Hastings remained disciplined in the face of high price
competition in the UK motor insurance market. Live
customer policies grew by 2 per cent over the year to just
over 3.1 million, supported by strong retention rates.
Hastings’ 2021 operating ratio of 80.3 per cent was materi-
ally ahead of the annual target of 88 per cent. Profit before
taxes amounted to EUR 127 million, or EUR 168 million
excluding non-operational depreciation and amortisation
of EUR 41 million. On 8 December 2021, Sampo increased
its holding in Hastings to 100 per cent.
Mandatum’s profit before taxes for 2021 increased to
EUR 291 million (154). The result was driven by a strong
investment return of 10.2 per cent and robust growth in
client assets. Mandatum Life’s Solvency II ratio was 190
per cent (188). Unit-linked and other client assets under
management grew by 21 per cent to EUR 11.1 billion (9.2),
driven by positive net flows and market movements.
Board of Directors’ Report 2021
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
4
BOARD OF DIRECTORS’ REPORT 2021
In 2021, Sampo reduced its holding in Nordea in three
tranches: in May, in September and in October. In total,
Sampo sold 397 million Nordea shares to institutional
investors through accelerated bookbuild offerings,
generating gross proceeds of EUR 3,847 million. Conse-
quently, Sampo held approximately 245.9 million Nordea
shares at the end of 2021, corresponding to 6.2 per cent
of all outstanding shares and voting rights in Nordea. In
connection with the Nordea share disposal in October
2021, Nordea was reclassified from an associated company
to a non-current asset held for the sale according to IFRS 5
in Sampo Group’s IFRS accounts. Sampo’s share of
Nordea’s net profit for 2021, excluding any accounting
effects related to the share disposals, amounted to EUR
409 million (427).
Sampo Group’s profit before taxes for 2021 increased
to EUR 3,171 million (380). The profit before taxes
included EUR 982 million of accounting effects defined
as extraordinary in accordance with Sampo Group’s
dividend policy. Without these items, the profit before
taxes amounted to EUR 2,189 million (1,541). The total
comprehensive income, taking changes in the market
value of assets into account, amounted to EUR 3,448
million (434). Earnings per share rose to EUR 4.63 (0.07),
or EUR 2.86 (2.16) excluding extraordinary items.
On 9 February 2022, Sampo plc’s Board of Directors
proposed a dividend of EUR 4.10 per share for the 2021
financial year to the Annual General Meeting to be held
on 18 May 2022. This includes an insurance dividend of
EUR 1.70 per share (1.60), representing growth of 6 per
cent, and the dividend of at least EUR 2.00 per share that
management indicated it would propose in connection
with the sale of Nordea shares on 26 October 2021. In addi-
tion to the dividend, Sampo launched on 1 October 2021 a
EUR 750 million share buyback programme of which EUR
380 million had been executed at year-end 2021.
Sampo Group’s year-end 2021 Solvency II ratio stood at
185 per cent, which represents an increase compared to
the 176 per cent reported at the end of 2020. Sampo targets
a solvency ratio of 170–190 per cent.
Sampo Group’s financial leverage declined to 23.8 per cent
from 28.6 per cent from the year-end 2020. The decline
was driven by growth in equity and decrease in financial
debt through debt maturities and a debt repurchase.
Adjusted for the proposed dividend and the ongoing
buyback programme, the 2021 year-end financial leverage
ratio stood at 27.9 per cent. Sampo Group targets financial
leverage below 30 per cent.
Sampo Group will issue a report on non-financial infor-
mation in accordance with Chapter 3a, Section 5 of the
Accounting Act. A separate report, Sustainability Report
2021, will be published in May 2022.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
5
BOARD OF DIRECTORS’ REPORT 2021
Key Figures
Sampo Group, 2021
EURm Change
Profit before taxes
*
)
If
Topdanmark
Hastings - —
Associates
*
)
- —
Mandatum
Holding (excl. Associates) - —
Profit for the period
Underwriting profit
Earnings per share, EUR
EPS (without eo. items) EUR *
)
EPS (based on OCI) EUR
RoE, %
*
)
Nordea- and Nordax-related accounting eects of EUR 982 million in January-December 2021 have
been defined as extraordinary items in accordance with Sampo Group’s dividend policy. The comparison
figure included extraordinary items of EUR -1,161 million.
Sampo Group financial targets for 2021–2023
Target –
Group
Mid-single digit UW profit growth
annually on average (excluding
COVID-19 effects)
32% (19% adjusting for the Hastings
acquisition and reported COVID-19
effects)
Group combined ratio: below 86% 81.4% (83.1% excluding reported
COVID-19 effects)
Solvency ratio: 170–190% 185%
Financial leverage: below 30% 23.8% (27.9% including dividend and
buybacks)
If Combined ratio: below 85%
81.3% (83.6% excluding COVID-19
effects)
Hastings
Operating ratio: below 88% 80.3%
Loss ratio: below 76% 62.2%
Financial targets for 2021–2023 announced at the Capital Markets Day on 24 February 2021.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
6
BOARD OF DIRECTORS’ REPORT 2021
Outlook
Outlook for 2022
Sampo Group’s P&C insurance operations are expected
to achieve underwriting margins that meet the annual
targets set for 2021–2023. At group level, Sampo targets
a combined ratio of below 86 per cent, while the target
for its largest subsidiary, If P&C, is below 85 per cent.
Hastings targets an operating ratio of below 88 per cent.
The combined and operating ratios of Sampo Group’s P&C
insurance operations are subject to quarterly volatility
driven by, among other factors, seasonal weather patterns,
large claims, prior year development and fluctuations
in claims frequency related to the COVID-19 pandemic.
These effects are particularly relevant for individual
segments and business areas, such as Hastings.
The mark-to-market component of investment returns
will be significantly influenced by capital markets’
developments, particularly in life insurance.
With regard to Topdanmark, reference is made to the
profit forecast model that the company publishes on a
quarterly basis.
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 major business units.
Major risks affecting the Group companies’ profitability
and its variation are market, credit, insurance, and
operational risks. 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. The COVID-19 pandemic has
recently led to supply chain problems, which combined
with rapidly increasing demand for consumer goods
has been visible as supply disruptions together with
rising energy and product prices. The pandemic and the
measures taken to contain the virus are consequently
currently causing significant uncertainties on economic
and 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 demographic changes, sustainability
issues, and technological developments in areas such as
artificial intelligence and digitalisation including threats
posed by cybercrime.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
7
BOARD OF DIRECTORS’ REPORT 2021
Dividend proposal
Dividend
Sampo Group disclosed on 24 February 2021 a capital
management framework designed to ensure high and
reliable capital returns supported by a strong but efficient
balance sheet. Under the framework, Sampo will return
ongoing surplus capital generation from its insurance
operations through an insurance dividend. Other forms
of surplus capital generation, including possible proceeds
from disposals of financial investments, are returned
through additional dividends and/or buybacks, to the
extent that the funds are not utilised to support business
development. Sampo targets a Solvency II ratio of 170 per
cent – 190 per cent and financial leverage below 30 per
cent.
According to Sampo plc’s Dividend Policy published on
6 February 2020, the total annual dividends paid will be
at least 70 per cent of Sampo Group’s net profit for the
year (excluding extraordinary items). For this purpose,
“extraordinary items” are defined as accounting items
related to the sale of Nordea shares during 2021 and the
change in Sampo Group’s ownership in Nordax Bank AB.
The parent company’s distributable capital and reserves
totalled EUR 8,565,347,307.19 of which profit for the
financial year 2021 was EUR 2,639,015,210.13. Based on
the policies outlined above, the Board proposes to the
Annual General Meeting that a total dividend of EUR 4.10
per share be paid to all shares except for the shares held
by Sampo plc on the dividend record date of 20 May 2022.
The total dividend includes an insurance dividend of EUR
1.70 per share as well as the dividend of at least EUR 2.00
per share that management indicated it will propose in
connection with the sale of Nordea shares on 26 October
2021.
As earnings per share excluding extraordinary items
amounted to EUR 2.86 per share, the payout ratio for the
total dividend equates to 143 per cent. The remainder of
the distributable funds are left in the equity capital. After
adjusting for the proposed dividend, Sampo Group’s 2021
year-end distributable funds amounted to EUR 6,323
million, Group Solvency II coverage to 185 per cent and
financial leverage to 27 per cent.
Dividend payment
The dividend is proposed to be paid to the shareholders
registered in the Register of Shareholders held by Euro-
clear Finland Oy as at the record date of 20 May 2022. The
Board proposes that the dividends be paid on 31 May 2022.
Financial position
No significant changes have taken place in the company’s
financial position since the end of the financial year. The
company’s liquidity position is good and in the view of
the Board, the proposed distributions do not jeopardise
the company’s ability to fulfil its obligations.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
8
BOARD OF DIRECTORS’ REPORT 2021
Operating environment
Nordic P&C insurance market
Historically, the Nordic P&C market has experienced
good profitability and lower combined ratios than other
European P&C markets. This trend continued in 2021
with profitability supported by a disciplined competitive
backdrop and some benefits from unusually low claims
frequencies.
During the year, the Nordic P&C industry experienced
further consolidation but competitive dynamics are not
expected to change significantly as market concentration
was already high. However, high consolidation combined
with new ambitious financial targets among large players
is expected to reinforce existing financial discipline.
The four largest players now account for approximately
80 to 90 per cent of the markets in Norway, Finland
and Sweden respectively. Many are established in more
than one Nordic country. In Denmark, the market is less
consolidated with the top four insurers controlling more
than 60 per cent of the market.
The price increases seen over the last few years in the
Nordic Commercial and Industrial P&C markets contin-
ued during 2021 with significant increases in areas with
previous insufficient rate adequacy, such as property. The
competitive situation in the large corporate segment was
supported by the withdrawal of certain competitors from
the market, resulting in rate increases having limited
effect on retention. The renewal at the beginning of 2022
looks favourable so far with continued rate increases
in general in the market. The Nordic private market
was competitive during 2021, but the larger operators
maintained strong financial discipline. Price increases
naturally varied between segments and products but were
in general in line with claims inflations.
As the economy recovered in 2021, inflation increased
across the Nordics with some elevated inflation in
segments such as building materials and energy.
However, higher inflation on building materials has so far
not translated into elevated claims inflation, as building
materials constitute a relatively small part of the total
claims cost. As the insurance market is generally sensitive
to claims inflation, disciplined firms are monitoring this
closely and managing inflation expectations through
commensurate price adjustments.
During the year, the Nordic region suffered various
weather-related events, of which the most severe was the
flooding in Gävle, Sweden, which led to people having
to leave their homes. Also, the devastating flooding in
Central Europe during the summer affected Nordic
corporate customers with operations in the flooded areas.
According to the UN’s climate panel IPCC, the effects
of climate change are already seen in the Nordic region
with more heatwaves and floods expected in the future.
Climate change and sustainability remain important
topics for the Nordic P&C industry with most large players
now having incorporated and communicated climate/ESG
targets in their strategy.
The COVID-19 pandemic affected Nordic insurance mar-
kets in 2021, albeit to a lesser degree than in the prior year.
Claims frequencies remained below normal levels for the
year as a whole, although the trend varied across quarters,
with motor and travel insurance being the most affected
lines of business. Negative pandemic-related effects were
observed in regard to premium development in certain
lines of business, such as travel insurance. Relatively low
levels of new car sales could also be partly linked to the
pandemic, e.g. via semi-conductor shortages, although
other factors, such as tax changes, also affected sales.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
9
BOARD OF DIRECTORS’ REPORT 2021
UK P&C insurance market
Premium reductions were observed across the UK
motor market throughout 2021, reflecting lower claims
frequencies as a result of COVID-19 restrictions, plus a
competitive new business pricing environment. Price
comparison websites, Hastings primary distribution
approach, continue to be channel of choice for customers
in the UK.
Full implementation of the FCA’s general insurance pric-
ing practices (GIPP) reforms was required for 1 January
2022, with Hastings having met this deadline and being
fully compliant. The new rules require that a renewal price
offered to a customer must be the same or better than a
new business price. The outcome of the reform remains
uncertain, but early indications showed increases in
market new business pricing at the start of 2022. Hastings
is well positioned to, over time, become a net beneficiary
from the reforms due to its approach to agile pricing, risk
selection and business model. Looking ahead to the rest
of 2022, new business average premiums are expected to
increase, reflecting both ongoing claims inflation and the
effects of GIPP.
Whiplash reforms, designed to reduce the cost of small
bodily injury claims, came into effect across the UK
market at the end of May 2021. As the relevant bodily
injury claims can take a long time to settle, it remains
too soon to fully assess the effectiveness of the reforms
on ultimate claims costs. There are, however, some early
indications of both a reduction in smaller bodily injury
claims frequencies and severities.
The home insurance market was relatively stable during
2021, with market pricing up slightly and continued
increases in the adoption of price comparison websites
as a distribution channel. Early indications are that new
business prices for home insurance have also gone up,
and somewhat more significantly than in motor insur-
ance, in January 2022, post-GIPP.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
10
BOARD OF DIRECTORS’ REPORT 2021
Business areas
If
If P&C is the leading property and casualty insurer in
the Nordic region, where it offers solutions in all major
lines of business through its four business areas; Private,
Commercial, Industrial and Baltic. If’s business model is
based on high customer satisfaction, best in class under-
writing and leveraging the scale benefits that its unified
Nordic model offers. Excellent digital sales and service
capabilities are a core part of If’s strategy, particularly in
the Private and SME Commercial market segments.
Underwriting result
If P&C reported an underwriting result of EUR 891
million (802) for 2021, representing 11 per cent growth
year-on-year. This was driven by a 0.8 percentage points
improvement in the combined ratio to 81.3 per cent
(82.1) and FX-adjusted premium growth of 4.3 per cent.
Excluding COVID-19 effects, year-on-year underwriting
profit grew by 15 per cent as the combined ratio improved
to approximately 83.3 per cent (85.1). The result compares
favourably to If P&C’s financial targets for 2021–2023 of
mid-single digit growth on average in underwriting profit
and a combined ratio below 85 per cent.
Results
If, 2021
EURm Change
Gross written premium
Net earned premiums
Claims incurred - -
Operating expenses - -
Underwriting result
Other technical income and expenses - - -
Allocated investment return transferred from
the non-technical account -
Technical result
Investment result
Allocated investment return transferred to the technical account - - -
Other income and expenses - -
Profit before taxes
Key figures Change
Combined ratio, % -
Risk ratio, % -
Cost ratio, % -
Expense ratio, % —
Large losses vs. normal*
)
,% -
Prior year development**
)
,% -
*
)
Positive large loss figures indicate above-normal large losses.
**
)
Positive figures for prior year development indicate positive reserve run-o.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
11
BOARD OF DIRECTORS’ REPORT 2021
Premium development
If P&C reported gross written premiums, GWP, of EUR
5,134 million (4,823) in 2021. Excluding currency effects,
premiums grew by 4.3 per cent year-on-year, driven
by strong development in Norway and the Baltics, in
particular. By business area, growth was robust across
the board and driven primarily by rate increases and
increased retention.
If P&C’s Private business delivered GWP growth of 3.7
per cent for the full year, driven by rate increases in line
with claims inflation, strong retention rates and a rise in
customer numbers. Geographically, growth was strongest
in Sweden and Norway both on a quarterly and yearly
basis. Nordic new car sales grew by 4 per cent over 2021
from relatively low volumes in 2020, with Norway being
the country with the strongest growth.
In 2021, If P&C’s Private customer base continued to grow
steadily in all countries and now stands at more than
3.2 million households, many of whom have multiple
products with If. This development was supported by
positive renewal in all countries, particularly in Norway
and Denmark. At the end of 2021 business area Private’s
retention was a record-high at >90 per cent with NPS at 61.
Development in online services and digital engagement
remained good in 2021, following consistent investments
into this area over many years. Self-service through My
Pages increased by 15 per cent to 11 million logins during
the year. One third of sales to new customers are now
digital and more than 50 per cent of claims reported
online.
Constant FX GWP growth in If P&C’s Commercial business
in 2021 was 4.3 per cent, driven primarily by Norway.
Over 2021 Commercial increased its sales and service
capacity by enhancing its customer offering and through
initiatives in sustainability, loss prevention and cyber
insurance. This supported an increase in number of
Commercial customers, driven by an improvement in
retention (from an already high level) and successful
renewals in all countries. Growth was supported by strong
momentum in online sales and continued expansion of
the digital offering with increased usage of self-service
solutions. In 2021 online sales in Commercial increased by
more than 60 per cent year-on-year, albeit from a modest
base.
In If P&C’s Industrial business, GWP grew by 5.4 per
cent in 2021 on an FX-adjusted basis. Annual premium
growth was driven by Norway and Sweden, while the
shrinking workers’ compensation market in Finland as
well as the large amount of multi-year project business
written in Denmark in 2020 affected growth negatively.
In 2021 Industrial saw strong renewals with significant
rate actions and improved retention. There was continued
focus on efficiency with the development of high-quality
online solutions for increased digital engagement and
self-service among Industrial customers. Approximately
50 per cent of clients now have access to If Login and of
those more than 90 per cent were active users during 2021
viewing policies, invoices, claims and issuing certificates
online.
If P&C’s Baltic business showed higher growth than
market average, as GWP increased by 10.8 per cent in
2021. Growth was strong in all three Baltic countries and
supported by a growing customer base and solid renewals
of existing customers.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
12
BOARD OF DIRECTORS’ REPORT 2021
Combined ratio development
If’s 2021 combined ratio of 81.3 per cent was 0.8 per-
centage points better than the year before (82.1), driven
mainly by an improvement in the adjusted risk ratio and
lower large losses. Large claims measured as a per cent of
net earned premiums were 0.8 percentage points worse
than expected for 2021, an improvement of 1.1 percentage
points compared to the prior year.
Severe weather claims during the year represented 0.9
percentage points of net earned premiums, which is 0.7
percentage points worse than prior year. The largest
severe weather claims recorded in 2021 related to the
floods in Germany in July-August, which affected If
P&C’s Industrial business area. The flood event in Gävle,
Sweden, in August also contributed to severe weather
losses.
Effects related to the pandemic declined during 2021 as
restrictions were eased following the roll-out of mass
vaccinations. Motor claims frequency continued to
normalise with traffic returning closer to normal levels.
COVID-19 effects for the year were approximately 2
percentage points (3).
Development on prior year reserves supported the com-
bined ratio by 3.6 percentage points in 2021, representing
a small reduction from 4.2 percentage points in 2020.
The Swedish motor third party liability (MTPL) portfolio
remained the largest driver of prior year profits.
In total, the risk ratio improved by 0.8 percentage points
to 59.9 per cent (60.7) in 2021. The adjusted risk ratio,
which excludes the impact of large losses, severe weather,
prior year development and COVID-19 effects, improved
by approximately 1.2 percentage points year-on-year over
2021 to 64.1 per cent (65.3). The positive development
of the adjusted risk ratio in 2021 primarily reflects rate
increases in the Commercial and Industrial business
areas, and improvements in price sophistication and risk
selection. The 2021 cost ratio decreased by 0.1 percentage
points to 21.4 per cent (21.5).
Investment result
If P&C reported a strong investment result of EUR 234
million (146) in 2021, driven by supportive equity and
credit markets. Mark-to-market return on investments
stood at 4.3 per cent for the year (2.3). At the end of 2021,
fixed income running yield was 1.5 per cent (1.4).
Profit before taxes
In total, If P&C reported profit before taxes for 2021
increased by almost 20 per cent to EUR 1,077 million
(901). Total comprehensive income for the year was EUR
1,090 million (866).
Combined ratio,% Risk ratio,%
Change Change
Private
Commercial - -
Industrial - -
Baltic
Sweden
Norway - -
Finland - -
Denmark - -
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
13
BOARD OF DIRECTORS’ REPORT 2021
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 10 per cent
market share in life insurance in Denmark. Topdanmark
focuses on the private, agricultural, and SME markets.
The company is listed on Nasdaq Copenhagen.
During November 2021, Sampo plc acquired 1,496,593
shares in Topdanmark through a series of block trades
that became available in the market. As a result, Sampo’s
holding in Topdanmark has increased to 43,493,663
shares, which corresponds to an ownership of 48.3 per
cent of all shares and 49.4 per cent of related voting rights
at the end of December 2021. The market value of the
holding was EUR 2,146 million on 31 December 2021.
Topdanmark’s profit before taxes for January-December
2021 amounted in Sampo Group’s profit and loss account
to EUR 346 million (167). The combined ratio for Janu-
ary–December 2021 improved to 82.3 per cent (85.2). The
expense ratio was 15.6 per cent (16.2).
Further information on Topdanmark A/S and its
January-December 2021 result is available at
www.topdanmark.com.
Results
Topdanmark, 2021
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, % -
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
14
BOARD OF DIRECTORS’ REPORT 2021
Hastings
Hastings is one of the leading digital general insurance
providers in the UK predominantly focused on serving UK
car, van, bike and home insurance customers. Hastings
has over 3 million customers and operates via its two
main trading subsidiaries, Hastings Insurance Services
Limited in the UK and Advantage Insurance Company
in Gibraltar. Sampo has consolidated Hastings in its
financial reporting as a subsidiary since November 2020.
Premium and customer
development
Gross written premiums for 2021 amounted to EUR 1,127
million, with average premiums marginally lower than
prior year reflecting a change in mix of customers to
lower risk segments and the impact of market premium
reductions observed in the UK motor market throughout
2021.
Customer policies grew 2 per cent year-on-year, to over 3.1
million. Customer retention rates continue to be high and
above market averages, while overall retail income per
policy also remaining broadly stable.
Home insurance customer policies grew by 16 per cent
year-on-year to just over 310,000. New home claims
handling capabilities were launched during the second
half of the year, further strengthening the home insurance
proposition.
Underwriting profitability
The calendar year loss ratio for 2021 was 62.2 per cent,
significantly ahead of the full-year target of 76 per cent.
Motor claims frequencies, though higher than 2020,
remained below 2019 levels throughout 2021, largely
reflecting reduced motor vehicle usage as a result of
COVID-19 restrictions. In particular, claims frequencies
in the first quarter of 2021 were significantly lower than in
2019, while development was closer to more normal levels
in the second half.
The average cost of claims continued to rise, reflecting
increases in the value of second-hand cars for total
loss claims and increases in repair costs, largely due
to extended repair periods as a result of COVID-19 and
general inflation in labour, parts and paint.
Results
Hastings, 2021
EURm
Gross written premium
Net earned premiums
Other operating income
Total revenue
Net insurance claims -
Operating expenses -
Underwriting profit
Investment income
Non-operational amortisation -
Finance costs -
Profit before taxes
Key figures
Live customer policies (million)
Loss ratio, %
Operating ratio, %
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
15
BOARD OF DIRECTORS’ REPORT 2021
Prior year development was positive, driven by favourable
development on large bodily injury claims, whilst a strong
reserving position has been maintained.
The operating ratio for 2021 was 80.3 per cent, signifi-
cantly better than the full-year target of 88 per cent, due
to the strong loss ratio performance. The ratio includes a
3.1 percentage point benefit from acquisition accounting
adjustments across revenue and operating expenses for
deferred acquisition costs and other fair value adjust-
ments.
UK motor and home insurance portfolios tend to see their
highest loss ratios in the first and fourth quarter of the
year due to seasonal fluctuations in weather conditions.
The underlying claims experience observed in the fourth
quarter of 2021 and to date in 2022 has been consistent
with this historical seasonality.
Profit before tax
Profit before tax amounted to EUR 127 million, or EUR
168 million excluding EUR 41 million of non-operational
depreciation and amortisation of intangibles created in
connection with the acquisition of Hastings by Sampo
and RMI in November 2020. An annualised cost of GBP
49.7 million (EUR 59 million at year-end 2021 exchange
rates) is expected to be incurred from non-operational
depreciation and amortisation from 2022 onward, until
November 2027. The charge does not affect cash or capital
generated by Hastings.
Strategic initiatives
Good progress continues to be made on strategic
initiatives, including development of new pricing models,
enhancements of claims and antifraud processes, digital
growth, the rollout of new products, and the launch of a
new brand positioning.
The continued collaboration work with the Sampo/If P&C
teams is progressing according to plan. New reinsurance
arrangements have been agreed for 2022, with a reduction
in quota share from 50 per cent to 35 per cent from
1 January 2022, meaning increased retention of profitable
written premiums.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
16
BOARD OF DIRECTORS’ REPORT 2021
Results
Mandatum, 2021
EURm Change
Premiums written
Net income from investments
Other operating income
Claims incurred - -
Change in liabilities contracts - -
Sta costs - -
Other operating expenses - -
Finance costs - -
Share of associates’ profit/loss — —
Profit before taxes
Key Figures Change
Return on equity, %
Mandatum
Mandatum is a leading Finnish financial services provider
offering savings, asset management, personal risk and
employee reward and retention services to private,
corporate and institutional clients. Mandatum products
are sold primarily in Finland, through advisers and
partnership channels, but it also offers certain services,
such as asset management, across the Nordic countries.
Mandatum’s profit before taxes for 2021 increased to EUR
291 million (154), including a group contribution of EUR
15 million (3) that effectively acts as a distribution of profit
to Sampo plc.
The result benefited from a EUR 44 million revaluation
of real estate assets. Discount rate changes had a negative
impact of EUR 130 million on the profit in 2021. The total
comprehensive income, which reflects changes in the
market value of assets, stood at EUR 338 million (213) after
tax in 2021.
The strong momentum in the financial markets supported
Mandatum’s performance throughout the year. The
investment result taken through the P&L increased to
EUR 187 million (86) and the fair value investment result
increased to EUR 319 million (206) with investment return
being 10.2 per cent.
Mandatum’s third-party assets under management, which
include unit-linked and other client assets, grew by 21
per cent to EUR 11.1 billion (9.2) at the end of 2021. The
growth was driven by a net flow of approximately EUR
600 million and positive market movements. The strong
volume development in client assets supported Manda-
tum’s operational result (expense result and result from
Asset Management), which was a record-high at EUR 45
million (27) in 2021. Mandatum’s risk result increased to
EUR 43 million (38), however, including a EUR 12 million
release from the longevity and claims reserve.
The run-off of Mandatum’s capital-intensive traditional
life insurance liabilities continued. With-profit reserves
related to the higher guarantees of 4.5 and 3.5 per cent
decreased by EUR 0.2 billion to EUR 1.7 billion (1.9). In
total, with-profit reserves amounted to EUR 3.2 billion
(3.5) at the end of December.
Discount rate changes had a negative impact of EUR
130 million in 2021. The discount rate is 0.25 per cent
for 2022–2025 and 0.75 per cent for 2026. Mandatum has
overall supplemented its technical reserves with a total of
EUR 274 million (218).
Mandatum Life’s 2021 year-end Solvency II ratio was
roughly unchanged at 190 per cent (188).
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
17
BOARD OF DIRECTORS’ REPORT 2021
Holding
Sampo plc is the parent company of Sampo Group and
responsible for implementing the group’s strategy and
capital management activities. Sampo plc controls the
group’s insurance subsidiaries and holds a number of
direct equity investments, the largest of which is the
stake in Nordea. Nordea was consolidated into the Sampo
P&L as an associated company until 25 October 2021. In
addition, Sampo owned 19.07 per cent in Nordax on 31
December 2021. Nordax was consolidated as an associated
company.
Holding segment’s profit before taxes for January-
December 2021 increased to EUR 1,331 million (-826).
Sampo’s holding in Nordea has decreased from
642,924,782 Nordea shares as at 31 December 2020, corre-
sponding to 15.9 per cent of all shares and voting rights,
to 245,924,782 shares in Nordea, equivalent to 6.2 per cent
in the total shares of the company on 31 December 2021
taking into account Nordea’s share buyback programme
and the shares cancelled during 2021. Total accounting
effects related to Nordea had a positive impact of EUR 809
million on profit before tax. Excluding these accounting
effects, Sampo’s share of Nordea’s profit was EUR 409
million (427).
Profit before taxes also included two positive accounting
effects from the acquisition of Bank Norwegian by Nordax
on 2 November 2021. First, EUR 84 million from the
disposal of Sampo ownership in Bank Norwegian. Second,
a further EUR 84 million was recorded as a result of
Sampo’s change in ownership in Nordax. Excluding these
accounting effects, Sampo’s share of Nordax’s profit was
EUR 9 million (12) in 2021.
Sampo plc’s holding in Nordea was booked in the
consolidated balance sheet on 31 December 2021 at EUR
2.2 billion, i.e. EUR 8.90 per share. The market value of the
holding was EUR 2.7 billion, i.e. EUR 10.79 per share, on 31
December 2021.
In connection with the Nordea share disposal in October
2021, Nordea was reclassified from an associated company
to a non-current asset held for the sale according to IFRS 5
in Sampo Group’s IFRS accounts.
Results
Holding, 2021
EURm Change
Net investment income
Other operating income -
Sta costs - -
Other operating expenses - - -
Finance costs - -
Share of associates’ profit -
Valuation dierence on disposal of associate shares - —
Impairment loss on Nordea shares — - —
Reversal of impairment losses on Nordea shares — —
Profit before taxes - —
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
18
BOARD OF DIRECTORS’ REPORT 2021
Financial standing
Group solvency
Sampo Group targets a Solvency II ratio between 170 and
190 per cent, as published on 24 February 2021.
At the end of December 2021, Sampo Group’s solvency
ratio was 185 per cent (176). The figure includes the
effects of the proposed dividend of EUR 4.10 per share
and the ongoing buyback programme of EUR 750 million
announced on 1 October 2021.
Sampo Group’s Solvency II own funds amounted to EUR
10,924 million (9,978) and the solvency capital require-
ment (SCR) was EUR 5,905 million (5,670) at the end of
December 2021. The decreasing effect on the SCR from
the Nordea share sales in May, September and October
was offset by Nordea’s strong share price performance and
other favourable market movements, as well as the rise in
the symmetric adjustment factor.
Financial leverage position
Sampo Group targets financial leverage below 30 per cent,
as announced on its 24 February 2021 Capital Markets
Day. Financial leverage is calculated as Group’s financial
debt divided by the sum of IFRS equity and financial debt.
Sampo Group’s IFRS equity amounted to EUR 13,464
million (12,258) and financial debt was EUR 4,211 million
(4,906) at the end of 2021. Thus, the financial leverage was
23.8 per cent (28.6). Deducting from equity the ongoing
buyback programme of EUR 750 million and the proposed
dividend of EUR 4.10 per share, would lead to an increase
in 2021 year-end financial leverage to 27.9 per cent.
During 2021, the financial debt decreased by EUR 695
million, mainly as a result of debt maturities and a debt
repurchase.
In June 2021, Sampo announced a tender offer and
proposals relating to senior debt issued by Sampo plc with
maturities in 2023 and 2025. As a result, EUR 182 million
nominal amount of these notes was repurchased pursuant
to the relevant offer. In September 2021, Sampo’s senior
bond of EUR 360 million matured. In December 2021, If
P&C called its three hybrid bonds, which decreased the
financial debt by approximately EUR 200 million.
At the end of 2021, EUR 2,015 million (2,158) of the Group’s
total financial debt consisted of hybrid bonds and EUR
2,195 (2,747) of senior bonds.
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.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
19
BOARD OF DIRECTORS’ REPORT 2021
Financial debt
Sampo Group, 31 December 2021
EURm Sampo plc If Topdanmark Hastings Mandatum Eliminations Group total
Sub/hybrid — -
Senior bonds — — — —
Total -
Ratings
Relevant ratings for Sampo Group companies on 31 December 2021 are presented in the table below.
Moody’s Standard & Poor’s Fitch Ratings
Rated company Rating Outlook 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 Positive - -
If P&C Insurance Holding Ltd (publ)
– Issuer Credit Rating
- - A Stable - -
Mandatum Life Insurance Company Ltd
– Issuer Credit Rating
- - A Positive - -
Hastings Group (Finance)
– Issuer default rating
- - - - A- Positive
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
20
BOARD OF DIRECTORS’ REPORT 2021
Other developments
Disposal of Nordea shares
In 2021, Sampo reduced its holding in Nordea in three
tranches: in May, in September and in October. In total,
Sampo sold 397 million Nordea shares to institutional
investors through accelerated bookbuild offerings,
generating gross proceeds of EUR 3,847 million. Conse-
quently, Sampo held approximately 245.9 million Nordea
shares at the end of 2021, corresponding to 6.2 per cent of
all outstanding shares and voting rights in Nordea, down
from 15.9 per cent at the end of 2020.
Sampo Group recorded EUR 899 million of positive
accounting effects related to Nordea in 2021, of which EUR
588 million were related to the disposal of Nordea shares.
In addition, a negative accounting effect of EUR 90 million
was recycled back to net income from other comprehensive
income.
Share sale in May
In May, Sampo sold 162 million Nordea shares. The
transaction generated approximately EUR 1,377 million in
gross proceeds and reduced Sampo’s stake in Nordea by 4
percentage points to 11.9 per cent of all outstanding shares
in Nordea.
The sale had a positive accounting effect of EUR 93
million on Sampo Group’s net income and an additional
EUR 30 million on the other comprehensive income in the
second quarter of 2021.
Share sale in September
In September, Sampo sold 73 million Nordea shares. The
transaction generated approximately EUR 745 million in
gross proceeds and reduced Sampo’s stake in Nordea by
1.8 percentage points to 10.1 per cent of all outstanding
shares in Nordea.
The sale had a positive accounting effect of EUR 144
million on Sampo Group’s net income and an additional
EUR 21 million on the other comprehensive income in the
third quarter of 2021.
On disclosing the result of the transaction, Sampo
management proposed to use the proceeds for a buyback
programme. On 1 October 2021, the Sampo Board of
Directors approved the launch of a EUR 750 million
buyback programme running to 18 May 2022, the expected
date of the AGM.
Share sale in October
In October, Sampo sold 162 million Nordea shares. The
transaction generated approximately EUR 1,725 million in
gross proceeds and reduced Sampo’s stake in Nordea by 4
percentage points to 6.1 per cent of all outstanding shares
in Nordea immediately after the sale.
The sale had a positive impact of EUR 351 million on
Sampo Group’s consolidated net income and an addi-
tional EUR 45 million on the other comprehensive income
in the fourth quarter of 2021.
On disclosing the result of the transaction, Sampo’s
management announced that it intends to propose that
the proceeds are used for an extra dividend of at least EUR
2.00 per share and that the buyback programme launched
on 1 October 2021 is extended to allow for more excess
capital to be returned through share repurchases.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
21
BOARD OF DIRECTORS’ REPORT 2021
Hastings acquisition
In line with Sampo Group’s P&C-focused strategy, Sampo
plc acquired on 8 December 2021 a minority ownership
in Hastings from Rand Merchant Investment Holdings
Limited (RMI). Under the terms of the agreement, Sampo
paid GBP 685 million (approximately EUR 806 million)
for RMI’s 30 per cent minority interest in Hastings and
the option held by RMI to acquire 10 per cent of Hastings’
share capital from Sampo by May 2022. The transaction
was funded through internal cash resources. Combined
with the initial acquisition in November 2020, Sampo paid
a total of GBP 1,851 million for 100 per cent of the share
capital in Hastings, which equated to 278 pence per share.
The acquisition had a negative 13 percentage points impact
on Sampo Group’s Solvency II ratio and increased financial
leverage by 1 percentage point.
As a consequence of the acquisition, Hastings was consoli-
dated as a fully-owned subsidiary of Sampo in the Group’s
financial reporting as of 8 December 2021.
Share buyback programme
As announced in the Capital Markets Day on 24 February
2021, Sampo is committed to returning excess capital
to its shareholders that may emerge as the holdings in
Nordea and other financial investments are divested. On
1 October 2021, the Board of Directors of Sampo plc made
a decision to launch a EUR 750 million buyback pro-
gramme based on the authorisation granted by Sampo’s
Annual General Meeting on 19 May 2021. The aggregate
purchase price of all Sampo A shares to be acquired under
the buyback programme is EUR 750 million at maximum.
The maximum amount of Sampo A shares that can be
repurchased is 20,000,000 shares corresponding to
approximately 3.6 per cent of the total number of shares in
Sampo. The repurchased shares will be cancelled leading to
a reduction in Sampo plc’s share capital. The repurchases
will reduce funds available for distribution of profit.
The share repurchases started on 4 October 2021 and will
end by 18 May 2022. By the end of 31 December 2021, the
company had bought in total 8,539,956 Sampo A shares
representing 1.54 per cent of the total number of shares in
Sampo plc.
Effects of COVID-19 on
Sampo Group
COVID-19-related effects to Sampo Group decreased
during 2021 after the roll-out of mass vaccinations and
eased pandemic-related restrictions.
In the Nordic and Baltic countries, motor claims fre-
quency continued to normalise as traffic returned to more
normal levels. In the fourth quarter of 2021, COVID-19
effects increased in If P&C insurance compared to the
third quarter as pandemic-related restrictions came back
into effect across If’s markets. Fourth quarter COVID-19
effects supported the combined ratio by approximately
2 percentage points (4). COVID-19 effects for the year
were approximately 2 percentage points (3). If estimates
COVID-19 effects by comparing key operating metrics,
such as claims frequencies, to pre-pandemic levels,
adjusted for well understood long term trends. As such,
the uncertainty of the estimates is significant and may
increase with the duration of the pandemic.
In UK, motor claims frequencies, though higher than
2020, have remained below 2019 levels throughout 2021,
reflecting reduced motor vehicle usage as a result of
COVID-19 restrictions and working from home guidance.
Hastings does not provide insurance for any business
lines which have been negatively impacted by COVID-19,
such as travel or business interruption.
In the autumn of 2021, Topdanmark stopped reporting
on the estimated impact of COVID-19 due to the high
uncertainty related to the assessment. The company
stated in its January-December 2021 report published
on 21 January 2022 that certain lines, such as travel
insurance, are still impacted by the COVID-19 situation.
More information on Topdanmark is available at
www.topdanmark.com.
Mandatum did not experience significant financial
COVID-19 related effects although the restrictions still
impacted the way of working as they did in other compa-
nies of Sampo Group as well.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
22
BOARD OF DIRECTORS’ REPORT 2021
Shares and share capital
SAs at 31 December 2021, 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, the number of
A shares must number at least 179,000,000 and no more
than 711,200,000. Meanwhile, the number of B shares
must number at least zero and no more than 4,800,000.
As at 31 December 2021 Sampo plc’s share capital
amounted to EUR 98 million (98) and the equity capital in
total to EUR 13,464 million (12,258).
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.
Sampo A shares have been quoted on the main list of
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.
Shareholders by the Number of Shares Held
Sampo plc, 31 December 2021
Number of shares
Shareholders,
number
Share-
holders, %
Shares,
number Shares, %
Voting rights,
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
Shares, share capital and shareholders
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
23
BOARD OF DIRECTORS’ REPORT 2021
Graph 30
2017 2018 2019 2020 2021 2022
Monthly Trading Volume
Sampo plc, 2017–2021
Shares
● Volume, Nasdaq Helsinki ● Volume, other market places
Graph 29
2017 2018 2019 2020 2021 2022
Share Price Performance
Sampo plc, 2017–2021
€
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
24
BOARD OF DIRECTORS’ REPORT 2021
Authorisations granted
to the Board
The Annual General Meeting held on 19 May 2021
authorised the Board to repurchase a maximum of
50,000,000 Sampo A shares. The price paid for the shares
repurchased under the authorisation shall be based on the
current market price of Sampo A shares on the securities
market. The authorisation will be valid until the close of
the next Annual General Meeting, expected to be held on
18 May 2022, nevertheless not more than 18 months after
AGM’s decision.
The Board of Sampo plc made a decision on share
repurchases on 1 October 2021 and the company started
share buybacks on 4 October. By the end of 2021, the
company had bought in total 8,539,956 Sampo A shares
representing 1.54 per cent of the total number of shares in
Sampo plc.
Shareholders
The number of Sampo plc’s shareholders increased during
2021 by 22,891 shareholders to 191,043 as at 31 December
2021. The holdings of nominee-registered and foreign
shareholders decreased to 61.6 per cent (63.0) of the
shares and 61.1 per cent of the votes (62.5).
Shareholders
Sampo plc, shareholders registered in Finland, 31 December 2021
A and B shares Number of shares % of share capital % of votes
Solidium Oy
Varma Mutual Pension Insurance Company
Sampo plc
Ilmarinen Mutual Pension Insurance Company
Elo Mutual Pension Insurance Company
The State Pension Fund
Oy Lival AB
OP-Finland Fund
OP Life Assurance Company Ltd
Nordea Nordic Fund
Svenska litteratursällskapet i Finland r.f.
Kaleva Mutual Insurance Company
*
)
Danske Invest Finnish Equity Fund
Åbo Akademi University Foundation
Nordea Pro Finland Fund
OMX Helsinki 25 Exchange Traded Fund
Föreningen Konstsamfundet rf
Nordea Life Assurance Finland Ltd.
Säästöpankki Kotimaa
Nordea Suomi
Foreign and nominee registered total
Other total
Total
*
)
332,538 A shares and 1,200,000 B shares.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
25
BOARD OF DIRECTORS’ REPORT 2021
Solidium Oy disclosed on 5 November 2021 that it had
sold 11 million A-shares in Sampo plc, representing
approximately 2.0 per cent of the outstanding shares of
Sampo, following an accelerated bookbuild offering to
Finnish and international institutional investors. Follow-
ing the equity offering, Solidium’s ownership in Sampo
decreased to 5.99 per cent of the outstanding shares and
to 5.94 of the votes.
Shareholders by Sector
Sampo plc (A and B shares), 31 December 2021
Sector Numberofshares
Corporations
Financial institutions and insurance corporations
Public institutions
Non-profit institutions
Households
Foreign ownership and nominee registered
Total
On 31 December 2021, the total number of Sampo A shares
owned directly, indirectly or through financial instru-
ments by BlackRock Inc. and its funds was above 5 per
cent of Sampo’s total stock. The total number of voting
rights attached to Sampo A shares was above 5 per cent of
Sampo’s total voting rights.
During 2021, Sampo plc received altogether 41 notifica-
tions 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.
The details of the notifications are available at
www.sampo.com/flaggings.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
26
BOARD OF DIRECTORS’ REPORT 2021
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 2021, members of Sampo plc’s Board of
Directors and their close family members owned either
directly or indirectly 3,944,446 (5,096,526) Sampo A
shares. Their combined holdings constituted 0.7 per cent
(0.9) of the share capital and related votes. In addition,
Chair of the Board of Directors Björn Wahlroos had
exposure to 1.7 million shares through an equity swap.
Thus, his total exposure was 5.5 million shares.
Members of the Group Executive Committee and their
close family members owned either directly or indirectly
549,544 (586,030) Sampo A shares representing 0.1 per
cent (0.1) of the share capital and related votes.
Shares owned by the Board of Directors and the Group Executive Committee
Sampo plc, 31 December 2021 and 31 December 2020
Board of Directors Dec Dec
Wahlroos
Fagerholm
Clausen
Clutterbuck
Ehrnrooth
Lamminen
Murto
Mäkinen *
)
–
Rauramo
**
)
–
Total
Board of Directors ownership of shares, %
Board of Directors share of votes, %
Group Executive Committee Dec Dec
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 from 19 April 2018 to 19 May 2021.
**
)
Member of the Board of Directors of Sampo plc since 19 May 2021.
***
)
Member of the Group Executive Committee of Sampo plc until 20 January 2021.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
27
BOARD OF DIRECTORS’ REPORT 2021
Governance
During 2021 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 fulfilment 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/year2021.
Annual General Meeting
The Annual General Meeting of Sampo plc, held on 19
May 2021, decided to distribute a dividend of EUR 1.70
per share for 2020. The record date for dividend payment
was 21 May 2021 and the dividend was paid on 28 May
2021. The Annual General Meeting adopted the financial
accounts for 2020 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 Clutter-
buck, Georg Ehrnrooth, Jannica Fagerholm, Johanna
Lamminen, Risto Murto and Björn Wahlroos. Markus
Rauramo was elected as a new member to the Board. The
Members of the Board were elected for a term continuing
until the close of the next Annual General Meeting.
At its organisational meeting, the Board elected Björn
Wahlroos as Chair and Jannica Fagerholm as Vice Chair.
Christian Clausen, Risto Murto and Björn Wahlroos
(Chair) were elected to the Nomination and Remuneration
Committee. Fiona Clutterbuck, Georg Ehrnrooth, Jannica
Fagerholm (Chair), Johanna Lamminen and Markus
Rauramo were elected to the Audit Committee.
All the Board members have been determined to be
independent of the company and its major shareholders
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 2022 Annual General Meeting: the Chair of the
Board will be paid an annual fee of EUR 184,000 and other
members of the Board will be paid EUR 95,000 each. Fur-
Governance and related issues
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 Report for Governing Bodies. The resolu-
tion was advisory.
Deloitte Ltd was elected as Auditor. The Auditor will be
paid a fee determined by an invoice approved by Sampo.
Jukka Vattulainen, APA, will act as the principally
responsible auditor.
There were altogether 330,774,332 shares (59.56 per cent of
shares) and 335,574,332 votes (59.91 per cent of all votes) in
the company represented, including advance voting and a
proxy representation, at the Annual General Meeting.
The minutes of the Annual General Meeting are available
for viewing at the AGM website at www.sampo.com and
at Sampo plc’s head office at Fabianinkatu 27, Helsinki,
Finland.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
28
BOARD OF DIRECTORS’ REPORT 2021
Sustainability
Sampo Group has a sustainability program, which drives
the sustainability work on a group-level. The program
consists of strategic sustainability themes and under each
of the themes the most material sustainability topics have
been identified.
In 2021, Sampo plc together with representatives from the
Group companies reviewed the sustainability program. As
a result of the review, the Group’s sustainability themes
going forward are: Sustainable business management
and practices, Sustainable corporate culture, Sustainable
investment management and operations, Sustainable
products and services, and Sustainable communities.
During the year, Sampo continued to work on sustainabil-
ity in line with the themes.
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 Sustainability
Report 2021, will be separate from the Board of Directors’
Report and published in May 2022 at www.sampo.com/
year2021. In addition to the group-level report, further
information on If, Topdanmark, Hastings, and Mandatum’s
sustainability work can be found in the companies’
respective reports. All the reports are available at
www.sampo.com/year2021.
Highlights from year 2021
Business management and practices
Adherence to applicable laws, regulations, and
internal policies and guidelines is an established part
of Sampo Group’s corporate culture. In 2021, Sampo
plc conducted an annual update of the Group’s Code
of Conduct and reviewed the document especially
from the sustainability point of view to strengthen
the group-level guidance on material topics. The
individual Group companies also took steps to develop
their supplementary governance structures, policies,
guidelines, and related training. In 2021, the Group
companies focused, for example, on developing their
data privacy and information security, anti-corruption
and bribery, and anti-money laundering practices.
Corporate culture
In 2021, the Sampo Group companies focused on sustaina-
ble corporate culture, for example, by refining new people
strategies, updating policies, introducing new employee
surveys, and launching new initiatives and trainings. The
results of the continued efforts are visible, as for example,
Mandatum was recognised as the number one place to
work in Finland in 2021, If, Topdanmark and Mandatum
met their employee satisfaction targets set for 2021, and
Hastings was ranked 29th in the Inclusive Top 50 UK
employers list.
Investment management and operations
During 2021, Sampo Group companies again strengthened
their investment policies by adding further instructions on
how to take environmental, social, and governance (ESG)
issues into account in their investment processes. As an
example, Mandatum included the UN Sustainable Develop-
ment Goals (SDGs) into the company’s investment policy
and aims to contribute positively to the selected goals
going forward. In addition, climate-related considerations
were in focus during the year. If made a commitment to
set science-based climate targets according to the Science
Based Targets initiative, and Hastings committed to reduce
the carbon intensity of its investment portfolio by 50 per
cent by 2030 and to be net-zero by 2050.
Products and services
In 2021, the Sampo Group companies, in particular If and
Topdanmark, continued to work on structured integration
of ESG considerations into insurance underwriting. In
June, If was the first Sampo Group company to integrate
the principles of the UN Global Compact directly into
its underwriting standards and existing Customer Due
Diligence (CDD) process for corporate clients. The develop-
ment work for If and Topdanmark continues in 2022.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
29
BOARD OF DIRECTORS’ REPORT 2021
In addition, the Group companies worked on sustainable
supply chain management during the year. If, for exam-
ple, reached its goal of having more than 75 per cent of its
suppliers sign the company’s Supplier Code of Conduct,
and Hastings worked with its suppliers to promote safe
reuse and recycling of used parts across both car and bike
claims repair process to meet the goal of doubling the
volume of green parts used in claims by the end of 2022.
In addition, customer satisfaction improved in all Sampo
Group companies during 2021.
Risk management
Sampo’s capital management framework aims to support
value creation by enabling its strategy. Quantitative targets
are set for group solvency and group financial leverage, but
other metrics are also steered, such as adequate liquidity
buffers. Subsidiary balance sheets are calibrated to cover
needs for business plans and to provide a stable dividend.
Potential risk concentrations and adequate diversification
of risks are generally monitored closely, and their sources
are analysed. To the extent possible risk concentrations
are proactively prevented 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 operational
flexibility, reputational risk associated with the compa-
ny’s business practices or associations and risks inherent
in business operations.
A more detailed description of Sampo Group’s risk man-
agement activities, governance, risks, and capitalisation
is available in the Risk Management Report 2021 at
www.sampo.com/year2021.
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 shall be respon-
sible 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
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
30
BOARD OF DIRECTORS’ REPORT 2021
The starting point of any compensation mechanism
shall be to encourage and stimulate employees to do
their best and surpass their targets. Remuneration
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 fulfilment 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 2021, a total of EUR 5.1
million (3.3) 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. The Sampo Board members are not
included in the schemes. The second allocation of the
long-term incentive scheme 2020 was in August 2021, in
accordance with the terms and conditions of the scheme,
directed to new recruits or current employees with
materially changed circumstances or holding a position
of increased strategic importance. The total number of
participants in the second allocation of the long-term
incentive scheme 2020 is 12 and a total of 220,000 units
out of a maximum of 225,000 were allocated in August
2021. Remaining incentive units, in total 393,000 units,
may be allocated in 2022. The scheme will vest in three
instalments starting from three years from each allocation.
In the long-term incentive scheme 2017, a total of 1,351,525
allocated incentive units remain. The second instalment
of the first allocation vested in 2021 and the third and last
instalment will vest in 2022. The second allocation of the
long-term incentive scheme 2017 had its first instalment in
2021 and the remaining instalments will vest in 2022 and
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 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 instalment 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 2021, a total of EUR 70 million (50), including social
costs, was paid as short-term incentives. During the same
period, a total of EUR 16 million (6), including social costs,
was paid from long-term incentive schemes. The result
impact of the long-term incentive schemes in force in
2021 was EUR 46 million (2).
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
31
BOARD OF DIRECTORS’ REPORT 2021
The Remuneration Report for Governing Bodies was
presented to the Annual General Meeting for the first time
in 2021. The General Meeting resolved, in accordance with
the voting result, to accept the presented Remuneration
Report. The resolution was advisory.
Sampo Group has published the Remuneration Report
for Governing Bodies for 2021 in February 2022 and
it is available at www.sampo.com/year2021. The
Remuneration Report for Governing Bodies provides
information on the remuneration paid to the Board
of Directors and the Group CEO during the previous finan-
cial period and has been prepared in accordance 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.
Changes in Group structure
Mandatum Group communicated on 12 February 2021
that it will establish Mandatum Asset Management.
In connection with this, there were changes made in
Mandatum Group’s structure during 2021. Sampo Group’s
asset management operations were merged to Mandatum
and the new group structure was complete on 1 September
2021. In the new structure Mandatum Life Insurance
Company Limited and Mandatum Asset Management Ltd
(“MAM”, previously Mandatum Life Investment Services
Ltd) operate as affiliates under a new parent company
Mandatum Holding Ltd, that is a wholly-owned subsidi-
ary of Sampo plc.
In line with Sampo Group’s P&C-focused strategy,
Sampo plc acquired on 8 December 2021 Rand Merchant
Investment Holdings Limited’s (RMI) 30 per cent minority
ownership in Hastings and the option for held by RMI
to acquire 10 per cent of Hastings. After the completion
of the transaction, Hastings was consolidated as a
fully-owned subsidiary of Sampo in the group’s financial
reporting as of 8 December 2021.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
32
BOARD OF DIRECTORS’ REPORT 2021
KAAVIO N.O 1
Group structure
31 December 2021
If P&C Insurance
Holding Ltd (publ)
Sweden
Nordea Bank Abp
Finland
100%
6.2%
100%
100%
100%
100%
100%
100%
Topdanmark
A/S
Denmark
Topdanmark
Forsikring A/S
Denmark
Topdanmark
Liv Holding A/S
Denmark
Topdanmark
Livsforsikring A/S
Denmark
Topdanmark
Kapitalforvaltning A/S
Denmark
100%
48.3%
Sampo plc
Finland
100%
Hastings Group
(Consolidated) Ltd
England and Wales
Hastings Group
Holdings Ltd
England and Wales
100%
100%
100%
100%
100%
Hastings Group
(Finance) plc
Jersey
Hastings Group
Ltd
Jersey
Hastings
Insurance
Services Ltd
England and Wales
Advantage
Insurance
Company Ltd
Gibraltar
Mandatum
Holding Ltd
Finland
100%
Mandatum Asset
Management Ltd
Finland
Mandatum Incentives Ltd
Finland
Mandatum Life
Insurance Company Ltd
Finland
100%
100%
100%
Mandatum AM
AIFM Ltd
Finland
Mandatum Fund
Management S.A.
Luxembourg
100%
100%
If P&C Insurance Ltd
(publ)
Sweden
If P&C Insurance AS
Estonia
If Livförsäkring AB
Sweden
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
33
BOARD OF DIRECTORS’ REPORT 2021
Change in Group management
On 20 January 2021 Ivar Martinsen left his position
as Head of BA Commercial in If P&C Insurance Ltd
(publ) and the membership of Sampo Group Executive
Committee.
KAAVIO N.O 2
Strategy
Ricard Wennerklint
Organisation
31 December 2021
Private
Ingrid Janbu Holthe
Commercial
Klas Svensson
Industrial
Poul Steensen
Baltic
Andris Morozovs
Morten Thorsrud
Petri Niemisvirta
Investments
Patrick Lapveteläinen
Group Finance
Knut Arne Alsaker
Risk Management
Kai Sotamaa
Investor Relations
Sami Taipalus
Human Resources
Johan Börjesson
Group CEO and President
Torbjörn Magnusson
Toby van der Meer
Peter Hermann
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
34
BOARD OF DIRECTORS’ REPORT 2021
Personnel
The average number of Sampo Group’s employees (FTE)
in 2021 amounted to 13,274 (13,227).
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 23 per cent and
Mandatum approximately 4 per cent of the personnel.
The parent company Sampo plc employed on average 0.5
per cent of the personnel.
In geographical terms Denmark and United Kingdom
employed both 22 per cent, Sweden 18 per cent, Finland
17 per cent, and Norway 12 per cent of the personnel. The
share of other countries was 9 per cent.
The total number of staff in If increased by 2 per cent. As
of 31 December 2021, If employed 7,287 persons.
The total number of staff in Topdanmark decreased by 3
per cent to 2,374 persons at the end of the year.
Hastings employed 2,995 persons as of 31 December 2021,
representing an increase of 1 per cent.
The total number of staff in Mandatum increased by
12 per cent after Mandatum Asset Management was
established with new recruitments and the Group’s asset
management operations were merged with Mandatum. As
of 31 December 2021, Mandatum employed 638 persons.
The total number of staff in Sampo plc decreased by
nearly 35 per cent after the merger of the asset manage-
ment operations to Mandatum. The holding company
employed 45 persons at the end of 2021.
On 31 December 2021, the total number of staff in Sampo
Group totalled 13,340 persons (13,178).
More detailed information on personnel in Sampo Group
is available in Sampo Group Sustainability Report 2021
to be published in May 2022 at www.sampo.com/year2021.
Events after the end of
the reporting period
Sampo’s share buyback programme launched on 4
October 2021 continued after the end of the reporting
period. By 8 February 2022, the company had bought in
total 12,219,968 Sampo A shares representing 2.20 per cent
of the total number of shares in Sampo plc. The progress
of the buyback programme can be followed on
www.sampo.com/releases.
SAMPO PLC
Board of Directors
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
35
BOARD OF DIRECTORS’ REPORT 2021
Group Key figures
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 staff
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 staff
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 staff
Key figures
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
36
BOARD OF DIRECTORS’ REPORT 2021
Hastings
Nov–
Dec
Premiums written before reinsurers’ share EURm — — —
Net premiums written EURm — — —
Premiums earned EURm — — —
Profit before taxes EURm - — — —
Average number of staff — — —
Mandatum
Premiums written before reinsurers’ share EURm
Profit before taxes EURm
Return on equity (at fair values)
Expense ratio
Average number of staff
Holding
Profit before taxes EURm -
Average number of staff
Persharekeyfigures
Earnings per share EUR
Earnings per share without extraordinary items related to associate companies
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 ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
Report
37
BOARD OF DIRECTORS’ REPORT 2021
A shares
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 2021.
The number of shares used at the balance sheet date was 546,811,894 and as the average number during the financial period 554,316,818.
In calculating the key figures the tax corresponding to the result for the accounting period has been taken into account.
In the net asset value per share, the Group valuation difference on associate Nordea and listed subsidiary Topdanmark have also been taken into account.
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
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38
BOARD OF DIRECTORS’ REPORT 2021
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 is available at www.sampo.com.
Group key figures
Profit before taxes for the Group
+ 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 (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
Financial leverage
financial debt
X 100%
equity + financial debt
Average number of sta
Average of month-end figures, adjusted for part-time
sta
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
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39
BOARD OF DIRECTORS’ REPORT 2021
Property & Casualty
insurance key figures
Risk ratio, %
+
claims incurred
- claims settlement expenses
X 100%
premiums earned
Cost ratio, %
+ operating expenses
+ claims settlement expenses
X 100%
premiums earned
Loss ratio, %
claims incurred
X 100%
premiums earned
Expense ratio, %
operating expenses
X 100%
premiums earned
Combined ratio, %
Loss ratio + expense ratio
Life insurance key figures
Expense ratio, %
+ operating expenses before change in deferred
acquisition costs
X 100%
+ claims settlement expenses
load income
Per Share Key Figures
Earnings per share
profit for the financial period attributable to the parent
company’s equity holders
adjusted average number of shares
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
Equity per share
equity attributable to the parent company’s equity holders
adjusted number of shares at balance sheet date
Net asset value per share
+ equity attributable to the parent company’s
equity holders
± valuation dierences on listed Group companies
adjusted number of shares at balance sheet date
Dividend per share, %
X 100%
dividend for the accounting period
adjusted number of shares at balance sheet date
Dividend per earnings, %
dividend per share
X 100%
earnings per share
Eective dividend yield, %
X 100%
dividend per share
adjusted closing share price at
balance sheet date
Price/earnings ratio
adjusted closing share price at balance sheet date
earnings per share
Market capitalisation
number of shares at balance sheet date
x closing share price at balance sheet date
Relative share trading volume, %
number of shares traded through the stock
exchange
X 100%
adjusted average number of shares
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
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40
BOARD OF DIRECTORS’ REPORT 2021
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)
Auditor’s ReportGroup’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Board of Directors’
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41
BOARD OF DIRECTORS’ REPORT 2021
GROUP’S IFRS FINANCIAL STATEMENTS
44
Consolidated
balance sheet
43
Statement of
Profit and other
comprehensive
Income
45
Statement of
changes in
equity
46
Statement of
cash flows
Board of Directors’
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Auditor’s Report
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Group’s IFRS Financial Statements
42
FINANCIAL STATEMENTS 2021
EURm Note – –
Insurance premiums written 9,411 8,375
Net income from investments 3,549 1,383
Other operating income 491 155
Claims incurred -6,239 -5,443
Change in liabilities for insurance and
investment contracts -3,123 -1,554
Sta costs -1,179 -960
Other operating expenses -976 -754
Finance costs -146 -112
Share of associates’ profit/loss 401 451
Valuation dierence on disposal of associate shares 84 -262
Impairment loss on Nordea shares — -899
Reversal of impairment losses on Nordea shares 899 —
Profit for the financial year before taxes 3,171 380
Taxes -423 -267
Profit for the financial year 2,748 112
Group’s IFRS Financial Statements
EURm Note 1–12/2021 1–12/2020
Other comprehensive income for the financial year
Items reclassifiable to profit or loss
Exchange dierences 80 74
Available-for-sale financial assets 460 259
Share of associates’ other comprehensive income 186 40
Taxes -83 -50
Total items reclassifiable to profit or loss, net of tax 643 322
Items not reclassifiable to profit or loss
Actuarial gains and losses from defined pension plans 73 0
Taxes -15 0
Total items not reclassifiable to profit or loss, net of tax 58 0
TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 3,448 434
Profit attributable to
Owners of the parent 2,567 37
Non-controlling interests 181 75
Total comprehensive income attributable to
Owners of the parent 3,272 359
Non-controlling interests 176 75
Basic earnings per share (EUR) 4.63 0.07
Statement of profit and other comprehensive income
Board of Directors’
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Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Group’s IFRS Financial Statements
43
FINANCIAL STATEMENTS 2021
Consolidated balance sheet
EURm Note 12/2021 12/2020
Assets
Property, plant and equipment 375 371
Investment property 568 666
Intangible assets 3,794 3,761
Investments in associates 777 5,370
Financial assets 23,321 24,420
Investments related to unit-linked insurance contracts 19,711 14,837
Deferred tax assets 39 49
Reinsurers’ share of insurance liabilities 2,295 1,821
Other assets 2,977 2,714
Cash and cash equivalents 4,819 2,520
Non-current assets held for sale 2,385 —
Total assets 61,061 56,529
Liabilities
Liabilities for insurance and investment contracts 20,369 19,956
Liabilities for unit-linked insurance and investment
contracts 19,550 16,285
Subordinated debt 2,016 2,158
Other financial liabilities 2,330 2,935
Deferred tax liabilities 855 717
Provisions 9 20
Employee benefits 26 98
Other liabilities 2,246 2,102
Liabilities related to non-current assets held for sale 196 —
Total liabilities 47,597 44,271
EURm Note
Equity
Share capital 98 98
Reserves 1,530 1,530
Retained earnings 9,952 9,282
Other components of equity 1,208 508
Equity attributable to owners of the parent 12,788 11,418
Non-controlling interests 676 840
Total equity 13,464 12,258
Total equity and liabilities 61,061 56,529
Board of Directors’
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Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Group’s IFRS Financial Statements
44
FINANCIAL STATEMENTS 2021
Statement of changes in equity
EURm
Share
capital
Legal
reserve
Invested
unrestricted
equity
Retained
earnings
1)
Translation
of foreign
operations
2)
Available-
for-sale
financial assets
3)
Total
Non-
controlling
interest Total
Equity at 1 January 2020 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
4)
— — — -833 — — -833 -52 -885
Share-based payments — — — -3 — — -3 — -3
Changes in associate share holdings — — — -19 — — -19 — -19
Other changes in equity — — — 6 — — 6 -6 —
Profit for the period — — — 37 — — 37 75 112
Other comprehensive income for the period — — — 37 67 217 322 — 322
Total comprehensive income — — — 74 67 217 359 75 434
Equity at 31 December 2020 98 4 1,527 9,282 -749 1,257 11,418 840 12,258
Changes in equity
Acquired non-controlling interests — — — -700 — — -700 -212 -912
Dividends
4)
— — — -944 — — -944 -137 -1,081
Acquisition of own shares — — — -380 — — -380 — -380
Changes in associate share holdings — — — 113 — — 113 — 113
Other changes in equity — — — 9 — — 9 9 18
Profit for the period — — — 2,567 — — 2,567 181 2,748
Other comprehensive income for the period — — — 6 335 365 705 -5 700
Total comprehensive income — — — 2,572 335 365 3,272 176 3,448
Equity at 31 December 2021 98 4 1,527 9,952 -415 1,622 12,788 676 13,464
1)
IAS 19 Pension benefits had a net eect of EURm 58 (2 ) on retained earnings.
2)
The total comprehensive income includes, in accordance with the Group’s holding, the share of associates’ other comprehensive income reclassified to profit and loss just before the classification of one associate
to non-current assets held for sale. The retained earnings include EURm -52 (38 ) of associates’ items not re-classifiable to profit or loss. The change in exchange dierences include associates’ exchange dierences
EURm 252 (6 ). Respectively, change in available-for-sale financial assets include EURm -17 (8 ) of valuation dierences.
3)
The amount recognised in equity from available-for-sale financial assets for the period totalled EURm 709 (263 ). The amount transferred to p/l amounted to EURm -333 (-49 ). EURm 5 (1 ) was transferred to the
Segregated Suomi portfolio. In the comparison year, EURm 6 from business acquisitions was recognised directly in the opening balance of the fair value reserve.
4)
Dividend per share 4.10 (1.70 ) 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’
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Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Group’s IFRS Financial Statements
45
FINANCIAL STATEMENTS 2021
Statement of cash flows
EURm 2021 2020
Operating activities
Profit before taxes 3,171 380
Adjustments:
Depreciation and amortisation 187 122
Unrealised gains and losses arising from valuation -1,257 -129
Realised gains and losses on investments -450 -241
Change in liabilities for insurance and investment contracts 3,520 1,127
Other adjustments
*
)
-1,397 781
Adjustments total 602 1,659
Change (+/-) in assets of operating activities
Investments
**
)
-1,788 -998
Other assets -269 44
Total -2,057 -954
Change (+/-) in liabilities of operating activities
Financial liabilities -53 8
Other liabilities 30 155
Paid taxes -350 -311
Paid interest -158 -128
Total -532 -277
Net cash from operating activities 1,185 809
Investing activities
Investments in subsidiary shares -936 -1,103
Divestments in associate shares 3,843 1,174
Dividends received from associates 339 —
Net investment in equipment and intangible assets 31 -160
Net cash from investing activities 3,277 -88
EURm 2021 2020
Financing activities
Dividends paid -944 -833
Dividends paid to non-controlling interests -137 -52
Acquisition of own shares -380 —
Issue of debt securities 147 1,191
Repayments of debt securities in issue -853 -1,199
Net cash used in financing activities -2,166 -892
Total cash flows 2,296 -172
Cash and cash equivalents at 1 January 2,520 2,677
Eects of exchange rate changes 3 14
Cash and cash equivalents at 31 December 4,819 2,520
Net change in cash and cash equivalents 2,296 -172
Additional information to the cash flow statement: 2021 2020
Interest income received 523 464
Dividend income received (excl. profit sharing from funds) 226 139
Total out-going cashflows from leases -34 -45
*
)
Other adjustments mainly relate to the sale of Nordea shares.
**
)
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 4,736 (2,358 ) and short-term
deposits (max 3 months) EURm 83 (162 ).
Note to the statement of cash flows
In the comparison year, 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 shareholder with 70% ownership. The net cash
flow arising from the acquisition was EUR -1,126 million, including cash and cash equivalents EUR
Board of Directors’
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Sampo plc’s notes to the financial statements
Group’s IFRS Financial Statements
46
FINANCIAL STATEMENTS 2021
GROUP’S NOTES TO THE FINANCIAL STATEMENTS
68
Segment
information
48
Summary of
significant
accounting policies
75
Material
partly-owned
subsidiaries
77
Other notes
to Group’s
financial statements
Insurancepremiumswritten......................................
Netincomefrominvestments ..................................
Otheroperatingincome .............................................
Claimsincurred ..............................................................
Changeinliabilitiesforinsuranceand
investmentcontracts ...................................................
Stacosts ........................................................................
Otheroperatingexpenses .........................................
Earningspershare ........................................................
Financialassetsandliabilities ..................................
Propertyplantandequipment ................................
Investmentproperty ....................................................
Intangibleassets ...........................................................
Investmentsinassociates ..........................................
Financialassets ..............................................................
Changeinfairvaluesoffinancialassets ...............
Determinationandhierarchyoffairvalues ..........
Movementsinlevelfinancialinstruments
measuredatfairvalue .................................................
Deferredtaxassetsandliabilities .........................
Taxes ................................................................................
Componentsofother
comprehensiveincome .............................................
Otherassets ..................................................................
Liabilitiesfrominsuranceand
investmentcontracts .................................................
Liabilitiesfromunit-linkedinsuranceand
investmentcontracts .................................................
Subordinateddebtsandotherfinancial
liabilities .........................................................................
Provisions.......................................................................
Employeebenefits ......................................................
Otherliabilities .............................................................
Contingentliabilitiesandcommitments
andlegalproceedings ...............................................
Equityandreserves ....................................................
Relatedpartydisclosures .........................................
Incentiveschemes ......................................................
Auditors’fees ...............................................................
Investmentsinsubsidiaries ......................................
Non-currentassetsheldforsale............................
Eventsafterthebalancesheetdate ....................
RiskManagementDisclosure ..................................
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47
FINANCIAL STATEMENTS 2021
Consolidation
financial statements of Sampo Group include Sampo
December 2021. The group subsidiaries have insurance
Denmark, the Baltic countries, and the United Kingdom.
A copy of Group’s financial statements is available at
internet address www.sampo.com.
Basis of preparation
Sampo Group has prepared the consolidated financial
statements for 2021 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 2021.
The annual improvements or other amendments to the
standards, adopted at the beginning of 2021, had no material
impact on the Group’s financial statements reporting.
Group notes to the financial statements
Summary of significant accounting policies
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.
Going concern accounting assumption has been assessed
by the Board and used in the preparation of the financial
statements.
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, investment property and share-based pay -
ments 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 9 February 2022. In
accordance with Limited Liability Companies Act, the
Annual General Meeting has right to approve or reject
the consolidated financial statements or change the
statements after they have been issued.
Consolidation
Subsidiaries
The consolidated financial statements combine the
financial statements of Sampo plc and all its subsidiaries.
Control exists when the Group has more than half of the
voting power or it has power over the entity together with
exposure to variable returns from its involvement there
and ability to use its power to affect the amount of these
returns. Subsidiaries are consolidated from the date on
which control is transferred 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
contingent liabilities, which are measured at the fair value
of the date of the acquisition. Acquisition related costs are
recognised through profit or loss. 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
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FINANCIAL STATEMENTS 2021
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. Unless otherwise demonstrated, 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 influence 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.
Non-controlling interests
Technical division of profit for the financial year and
total comprehensive income to the owners of the parent
and non-controlling interests is presented after the
statement of comprehensive income. The share of profits
is attributed to non-controlling interests even if it should
be negative.
Non-controlling interests are presented in the balance
sheet separately as part of equity.
Non-controlling interests in an acquiree are measured
either at fair value or as a proportionate share of net assets
of the acquiree. The choice is made for each acquisition
separately. At the end of financial reporting period,
Sampo’s non-controlling interests were determined as the
proportionate share of net assets of the acquirees.
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 transac-
tions 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 non-monetary financial assets
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49
FINANCIAL STATEMENTS 2021
classified as available-for-sale financial assets are recog-
nised 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.
euro(EUR)
Balance
sheetdate
Average
exchangerate
Swedish krona (SEK)
Danish krona (DKK)
Pound sterling (GBP)
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.
Non-current assets held for sale
Non-current assets and the assets and liabilities related
to discontinued operations are classified as held for sale,
if their carrying amount will be recovered principally
through sales transactions rather than from continuing
use. For this to be the case, the sale must be highly
probable, the asset or disposal group must be available
for immediate sale in its present condition subject only
to terms that are usual and customary for sales of such
assets. In addition, the management must be committed
to a plan to sell, and the sale should be expected to qualify
for recognition as a completed sale within one year from
the date of classification.
Assets that meet the criteria to be classified as held for
sale are measured at the lower of carrying amount and
fair value less costs to sell. Immediately before the initial
classification of the asset as held for sale, the carrying
amount of the asset shall be measured in accordance
with applicable IFRSs. If the fair value less costs to sell
is the lower, an entity recognises an impairment loss at
initial reclassification. Gains for subsequent increases
in fair value are recognised through profit or loss. Once
reclassified, any depreciation or recognition of associates’
share of profit or loss on such assets ceases.
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FINANCIAL STATEMENTS 2021
Revenue recognition principles
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.
In the life insurance business, liabilities arising from
insurance and investment contracts are 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’.
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’.
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
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 services is recognised when the 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 performance 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’.
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Financial assets and liabilities
Financial assets and liabilities are measured at the initial
recognition at fair value. In the acquisition of financial
assets and liabilities not measured at fair value, transac-
tion costs directly attributable to acquisition or issue are
added or deducted respectively.
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.
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 through 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.
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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.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative
financial investments that are designated as availa-
ble-for-sale or that are not categorised into any other
category. Available-for-sale financial assets comprise debt
and equity securities and funds.
Available-for-sale financial assets are initially recognised
at 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.
Fair values of financial assets are based on either
published price quotations or valuation techniques based
on market observable inputs, where available. If these
are not available, 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.
For a limited amount of assets, the value needs to be
determined using these other techniques.
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The carrying amount of cash and cash equivalents as well
as settlement receivables included in other assets is used
as an approximation of fair value.
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.
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.
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 recognised, 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
to the Group. Objective evidence is first assessed for
financial assets that are individually significant, and
then 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 receiv-
able’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.
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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
If there is objective evidence of an impairment of
available-for-sale financial assets, this is evaluated in a
separate assessment. This 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 on a case by case basis with
consideration 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
through p/l.
If, in a subsequent period, the fair value of a debt security
increases and the increase can objectively be related to an
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 instru-
ments are recognised through 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.
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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
include interest rate swaps and cross currency interest
rate swaps. 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 remain-
ing 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.
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,
cross currency interest rate 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.
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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 contracts
with duration under 12 months 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.
Right-of-use assets are amortised on a straight-line basis
over the lease period. 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
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
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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.
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.
The impairment loss is reversed, if there has been a
change in circumstances and the recoverable amount has
changed after the recognition of the impairment loss, but
no more than to the carrying amount which it would have
been without recognition of the impairment loss. Impair-
ment 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 at fair
value. The accounting principle has been changed from
acquisition model to fair value model in the financial year
2021 in order to align the Group accounting principles.
The Group has assessed that the change had an immate-
rial effect on the consolidated financial statements.
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The fair value of investment property is estimated using
methods based on estimates of future cash flows and
market-based return expectations (cash flow models used
for present value calculation) and comparison methods
based on information from actual sales in the market. The
valuation considers 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 using both the Group’s
internal resources and external independent surveyors.
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 36.
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.
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.
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FINANCIAL STATEMENTS 2021
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 treat-
ment, 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.
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
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.
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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
minimum 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 accord-
ance 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 policy-
holder 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 accor-
dance 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.
All unit-linked insurance contracts are payable on
demand at market value. In case of death, 101 per cent of
the amount is payable. This feature is considered an insig-
nificant insurance risk, and the contracts are categorised
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.
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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
correspondingly. If the aggregate amount of the liability
for the unit-linked and other business presumes an
augmentation, 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. Continuity
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.
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.
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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 through 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 2017 I, 2017 II, 2020 I and 2020 II for
the management and key employees). Topdanmark had
one mainly share-settled incentive scheme for the execu-
tive board and senior executives during the financial year.
Hastings had also a share-based incentive scheme settled
in cash during the financial year.
More information on the different incentive schemes of
the Group companies in note 31 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
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.
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FINANCIAL STATEMENTS 2021
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 liabilities and assets are offset in the individ-
ual companies, if, and only if, they relate to income taxes
levied by the same taxation authority and the company
has a legally enforceable right of offset them.
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.
Treasury shares
The purchase price paid for buy-back of treasury shares
(own shares) is directly deducted from equity. No gains or
losses are recognised from purchase, sale or cancellation
of own shares. If own shares are re-issued, difference
between purchase price and consideration received is
recognised in premium reserve.
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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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’.
During the financial year, fair values of investment
property have partially been determined by using internal
resources 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.
Consolidating Topdanmark as a subsidiary
According to IFRS 10 Consolidated Financial Statements
an investor controls an investee when it is exposed, or has
rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through
its power over the investee.
On 30 September 2017 Sampo’s ownership of Topdanmark
AS’s shares was 44.2 per cent and 49.1 per cent of votes.
Then Sampo’s management considered thoroughly all
facts and circumstances required by the standard in
assessing whether Sampo controlled Topdanmark and
concluded to consolidate Topdanmark as a subsidiary
in the consolidated financial statements. Consideration
included, among other things, the fact that Sampo was
the biggest individual investor and Sampo was not aware
of any agreements between the other investors.
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FINANCIAL STATEMENTS 2021
In addition, it was considered that Sampo had the
power to direct Topdanmark’s relevant activities, i.e. the
activities that significantly affect the investee’s returns.
At the time of assessment, Sampo had three members in
Topdanmark’s Board of Directors, one of them being the
Chairman. In total, there are 9 members in Topdanmark’s
Board and 50 per cent of votes is required for the decision
making according to the articles of association. However,
Sampo has the right, at its discretion, to convene an
extraordinary general meeting to change the composition
of the board of directors and therefore gain the majority of
voting rights on the board of directors.
Non-current assets held for sale
In February 2021, Sampo’s Board of Directors announced
an intention statement to materially reduce Sampo’s hold-
ing in Nordea over the following 18 months. In October
2021, Nordea’s shares were classified to non-current assets
held for sale in accordance with IFRS 5
Non-current assets
held for sale and discontinued operations
. The decision for
reclassification was based on Sampo’s management’s
assumptions that the book value will be recovered
principally through a sale transaction. In accordance with
the view of Sampo’s management, the shares are available
for immediate sale and the sale is highly probable within
12 months from the reclassification.
Additional information on the reclassification in note 34
Non-current assets held for sale.
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
business in later financial years when they become effec-
tive, or if the effective date is other than the beginning
of the financial year, during the financial year following
the effective date. The following new IFRSs will have an
influence on the Group reporting processes:
• IFRS 17
Insurance Contracts
• IFRS 9
Financial Instruments
IFRS 17 Insurance Contracts
(effective for annual periods
beginning on 1 Jan 2023 or after)
The IASB published the IFRS 17
Insurance Contracts
on
18 May 2017. IFRS 17 and the June 2020 amendments were
adopted by European Union on 19 November 2021, except
for an optional exemption from applying annual cohort
requirement for groups of contracts. Sampo Group is not
planning to apply the exemption.
IFRS 17 will replace the current IFRS 4 Insurance
Contracts and establishes principles for the recognition,
measurement, presentation, and disclosures of insurance
contracts. IFRS 17 is applied to insurance contracts,
reinsurance contracts as well as to certain investment
contracts with discretionary participation features. The
objective of the standard is to provide relevant informa-
tion for the users of financial statements that faithfully
presents the insurance contracts and to harmonise the
measurement of insurance liabilities.
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Under IFRS 17 the measurement of insurance contracts
is based on the general measurement model applicable
to all insurance contracts to measure insurance contract
liabilities. Under the general model insurance contracts
are measured based on present value of future cash flows,
adjusted to reflect the time value of money, including a
risk adjustment and a contractual service margin. The
contractual service margin represents the unearned profit
that will be recognised in the statement of profit or loss
when services are provided during future periods. At
reporting date, the fulfilment cash flows are remeasured
using current assumptions.
Also, under IFRS 17 the variable fee approach is to be
applied to direct participating insurance contracts. The
variable fee approach represents a modification from the
general measurement model where the treatment of CSM
is modified.
When certain criteria are met, insurers may apply a
simplified approach, premium allocation approach (PAA),
for measurement of insurance contracts. Under this
approach, the measurement of liability for remaining
coverage is based on premiums received, which repre-
sents a simplification of the general measurement model.
Premium allocation approach is eligible to insurance
contracts with a coverage period of one year or less, or for
contracts where the measurement based on this approach
(PAA) would not differ materially from the measurement
achieved under the general measurement model.
Sampo Group will continue to assess the impacts of IFRS
17 during the financial year 2022. Based on a preliminary
analysis, the premium allocation approach will be applied
in the non-life companies. All three measurement models
are likely to be applied in the life companies of Sampo
Group. The variable fee approach will mainly be applied
to unit-linked insurance contracts. Implementation
of IFRS 17 is expected to have a major impact on the
presentation and disclosures of the financial statements.
On transition to IFRS 17 a full retrospective approach and
restatement of previous year’s comparatives is required.
However, if the application of a full retrospective approach
is impracticable, then both a modified retrospective
approach and a fair value approach may be applied. Based
on a preliminary assessment, a full retrospective approach
is anticipated to be applied in the Group’s non-life com-
panies whereas all transition methods are expected to be
applied in the Group’s life companies.
Sampo Group continues the process development to meet
the IFRS 17 reporting requirements. The focus is on the
development of both actuarial and financial reporting
processes.
IFRS 9 Financial Instruments
IFRS 9
Financial Instruments
standard (effective for
annual periods beginning on 1 Jan 2018 or after)
supersedes IAS 39
Financial Instruments: Recognition and
Measurement
. Sampo is going to utilise the temporary
exception option, outlined in the following paragraph,
and apply the standard on the annual period beginning
on 1 Jan 2023. The comparative period 2022 will not be
restated. The new standard changes the classification
and measurement of financial assets and includes a new
impairment model based on expected credit losses.
IFRS 17
Insurance Contracts
(effective for annual periods
beginning on 1 Jan 2023 or after) superseding IFRS 4
Insurance contracts, 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, at the latest
on annual period beginning on 1 Jan 2023. The temporary
exemption 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
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FINANCIAL STATEMENTS 2021
insurance. Another allowed option was 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 analysed the preconditions for applying
the temporary exemption and stated that they are met.
Therefore, the Group will apply the exemption and apply
IFRS 9
Financial Instruments
at the same time with the
upcoming IFRS 17
Insurance contracts
. The implementa-
tion of IFRS 9 is not expected to have a material impact
on the Group’s balance sheet, as the main part of financial
assets is currently booked at fair value in the balance
sheet, as will be the case also under IFRS 9.
Segment information
Geographical information has been disclosed about
income from external customers and non-current assets.
The reported areas are Finland , Sweden, Norway, Denmark,
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. There was no
significant income between segments during the financial
periods.
Depreciation and amortisation by segment are disclosed
in notes 10–12 and investments in associates in note 13.
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FINANCIAL STATEMENTS 2021
Consolidated comprehensive income statement by business segment for year ended 31 December 2021
EURm If Topdanmark Hastings 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 dierence on disposal of associate shares — — — — —
Reversal of impairment loss on Nordea shares — — — — —
Profit for the financial year before taxes
Taxes - - - - - — -
Profit for the financial year
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FINANCIAL STATEMENTS 2021
EURm If Topdanmark Hastings Mandatum Holding Elimination Group
Other comprehensive income for the financial year
Items reclassifiable to profit or loss
Exchange dierences - — - —
Available-for-sale financial assets — - —
Share of associates’ 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 FINANCIAL 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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FINANCIAL STATEMENTS 2021
Consolidated comprehensive 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 - - - — - -
Staff costs - - - - - — -
Other operating expenses - - - - - -
Finance costs - - - - - -
Share of associates’ profit/loss — —
Valuation difference on disposal of Nordea shares — — — — - — -
Impairment loss on Nordea shares — — — — - — -
Profit for the financial year before taxes - -
Taxes - - - — -
Profit for the financial year - -
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FINANCIAL STATEMENTS 2021
EURm If Topdanmark
Hastings
Nov–Dec Mandatum Holding Elimination Group
Other comprehensive income for the financial year
Items reclassifiable to profit or loss
Exchange dierences -
Available-for-sale financial assets — —
Share of other comprehensive income of associates — — — — —
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 FINANCIAL 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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FINANCIAL STATEMENTS 2021
Consolidated balance sheet by business segment at 31 December 2021
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 — — — -
Deferred tax assets — — -
Reinsurers’ share of insurance liabilities — —
Other assets -
Cash and cash equivalents —
Non-current assets held for sale — — — —
Total assets -
Liabilities
Liabilities for insurance and investment contracts — —
Liabilities for unit-linked insurance and investment contracts — — — -
Subordinated debt — -
Other financial liabilities —
Deferred tax liabilities —
Provisions — — — — —
Employee benefits — — — — —
Other liabilities -
Liabilities related to non-current assets held for sale — — — — —
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
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FINANCIAL STATEMENTS 2021
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 — — — -
Deferred 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 —
Deferred 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
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FINANCIAL STATEMENTS 2021
Geographical information
EURm Finland Sweden Norway Denmark UK Baltic Total
2021
Revenue
from external
customers
Non-current
assets
2020
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. Holding includes
net investment income and other operating income. 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.
Material partly-owned subsidiaries
Equity interest held by
non-controlling interests
Name Country
Topdanmark A/S Denmark
Hastings Group (Consolidated) Limited
*
)
United Kingdom —
Accumulated balances of material
non-controlling interests
Topdanmark A/S
Hastings Group Holdings Plc —
*
)
Acquisition of non-controlling interests in Hastings
On December 8 2021, Sampo plc announced that it had signed an agreement with Rand
Merchant Investment Holdings Limited (RMI) to acquire its ownership in Hastings. Under the
terms of the agreement, Sampo paid GBP 685 million (approx. EUR 806 million) for RMI’s 30 per
cent non-controlling interest in Hastings and the option held by RMI to acquire 10 per cent of
Hastings’ share capital from Sampo by May 2022. The purchase consideration was paid and the
transaction completed later on the same day.
The difference between the carrying amount and the fair value of the non-controlling interests
approximately EUR -590 million was recognised directly in the equity of the parent company
shareholders.
The summarised financial information
Figures are before inter-company eliminations. The table presents the non-controlling interests’
share of Topdanmark and Hastings. Amounts before the separation of non-controlling interests
can be seen in the Group’s segment income statement and balance sheet.
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FINANCIAL STATEMENTS 2021
Non-controlling interests’ share of the income statement
EURm Hastings Topdanmark
Hastings
Nov–Dec 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 for the financial year
before taxes -
Taxes - - -
Profit for the financial year
attributable to non-controlling
interests -
Non-controlling interests’ share of the balance sheet
EURm Topdanmark Hastings 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
Hastings Topdanmark
Hastings
Nov–Dec Topdanmark
Dividends paid to
non-controlling interests —
Cash flows allocated to
non-controlling interests -
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FINANCIAL STATEMENTS 2021
Other notes to Group’s financial statements 1–36
1 Insurance premiums written
EURm
P&C insurance
Life insurance
Insurance contracts
Investment contracts
Insurance premiums written, gross
Reinsurers’ share
P&C insurance - -
Life insurance, insurance contracts - -
Reinsurers’ share, total - -
Group insurance premiums written total, net
1)
1)
The change in unearned premiums is presented in note 5, Change in liabilities for insurance and
investment contracts.
2 Net income from investments
If
EURm
Financial asset
Derivative financial instruments
Gains/losses - -
Loans and receivables
Interest income
EURm
Financial assets available-for-sale
Debt securities
Interest income
Impairment losses — -
Reversal of 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
Expenses on other than financial liabilities - -
Eect of discounting annuities - -
Fee and commission expenses
Asset management - -
If, total
Included in gains/losses from financial assets available-for-sale is a net gain of EURm 80 (-12)
transferred from the fair value reserve.
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FINANCIAL STATEMENTS 2021
Topdanmark
EURm
Financial asset
Derivative financial instruments
Gains/losses -
Financial assets for trading
Debt securities
Interest income
Gains/losses - -
Equity securities
Gains/losses
Dividend income
Total
Investments related to unit-linked contracts
Debt securities
Interest income
Gains/losses -
Equity securities
Gains/losses
Dividend income
Derivatives
Interest income - -
Gains/losses
Other financial assets
Gains/losses
Total
Loans and receivables
Interest income -
Total from financial assets
EURm
Net income from investment property
Pension tax returns - -
Eect of discounting annuities, insurance liabilities -
Other expenses related to investment activities - -
Topdanmark, total
Hastings
EURm
Nov–
Dec
Financial asset
Financial assets available-for-sale
Debt securities
Interest income
Gains/losses
Total
Hastings, total
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FINANCIAL STATEMENTS 2021
Mandatum
EURm
Financial asset
Derivative financial instruments
Gains/losses -
Investments related to unit-linked contracts
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
Loans and receivables
Interest income
Exchange dierences -
Total -
EURm
Financial assets available-for-sale
Debt securities
Interest income
Gains/losses
Impairment losses —
Reversal of impairment losses -
Exchange dierences -
Equity securities
Gains/losses
Impairment losses - -
Dividend income
Total
Total financial assets
Other assets
Investment properties
Gains/losses
Impairment losses - —
Other
Total
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 254 (94)
transferred from the fair value reserve.
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FINANCIAL STATEMENTS 2021
Holding
EURm
Financial assets
Derivative financial instruments
Gains/losses
Loans and receivables - -
Financial assets available-for-sale
Debt securities
Interest income
Exchange dierences -
Equity securities
Gains/losses
Impairment losses — -
Dividend income
Total 142 3
Total financial assets 144 5
Other assets
Holding, total 146 4
Included in gains/losses from financial assets available for-sale is a net gain of EURm 83 (-14)
transferred from the fair value reserve.
EURm
Elimination items between segments - -
Group net investment income, total 3,549 1,383
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 effect 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.
3 Other operating income
EURm
Other income
Other technical income
Income related to broker-activities
Group other operating income, total 491 155
Other technical income consists of income in insurance operations that does not involve the
transfer of insurance risk, such as sales commission and services for administration, claims
settlement, etc. in insurance contracts on behalf of other parties.
Furthermore, other operating income includes income from roadside assistance services
provided by If’s subsidiary Viking Assistance Group AS, which are recognised when roadside
assistance has been provided. In Sampo Group, the amount of income in insignificant.
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FINANCIAL STATEMENTS 2021
4 Claims incurred
EURm
Claims paid
P&C insurance - -
Life insurance
Insurance contracts - -
Investment contracts - -
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 - -
5 Change in liabilities for insurance
and investment contracts
EURm
Change in unearned premium provision
P&C insurance - -
Life insurance
Insurance contracts - -
Investment contracts - -
Total change in liabilities, gross - -
Reinsurers’ share
P&C insurance
Group change in liabilities for insurance and
investment contracts total, net - -
6 Staff costs
EURm
Wages and salaries - -
Cash-settled share-based payments - -
Share-settled share-based payments - -
Pension costs
defined contribution plans - -
defined benefit plans (Note 26) - -
Other social security costs - -
Group sta costs, total - -
More information on share-based payments is in note 31 Incentive schemes.
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FINANCIAL STATEMENTS 2021
7 Other operating expenses
EURm
IT costs - -
Other sta costs - -
Marketing expenses - -
Depreciation and amortisation - -
Depreciation on RoU assets - -
Rental expenses
*
)
- -
Change in deferred acquisition costs -
Direct insurance commissions - -
Commissions on reinsurance ceded
Other - -
Group other operating expenses, total - -
*
)
From leases on which exemptions for not recognising lease liabilities in the balance sheet is applied in
accordance with IFRS 16.
Item Other includes e.g. expenses related to communication, external services and other
administrative expenses.
8 Earnings per share
EURm
Earnings per share
Profit or loss attributable to the equity holders
of the parent company
Weighted average number of shares outstanding
during the financial year
*
)
Earnings per share (EUR per share)
*
)
The weighted average number of treasury shares during the financial year has been taken into account
in the number of shares. There were no other share related transactions during the financial year.
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. Cash and cash equivalents are included in the amount loans and receivables.
EURm
Carrying
Amount
Interest
Incexp
Gains
Losses
Impairment
losses
Dividend
Income
FINANCIAL ASSETS
Financial assets at fair value
through p/l
Derivative financial instruments - — —
Financial assets at fair value
through p/l —
Loans and receivables - — —
Financial assets
available-for-sale -
Total -
Assets held for sale in Mandatum -
Group’s financial assets, total
FINANCIAL LIABILITIES
Financial liabilities at fair value
through p/l
Derivative financial instruments — —
Other financial liabilities - -
Group financial liabilities, total - -
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FINANCIAL STATEMENTS 2021
EURm
Carrying
Amount
Interest
Incexp
Gains
Losses
Impairment
losses
Dividend
Income
FINANCIAL ASSETS
Financial assets at fair value
through p/l
Derivative financial instruments — —
Financial assets at fair value
through p/l - —
Loans and receivables - — —
Financial assets available-for-sale -
Group financial assets, total -
FINANCIAL LIABILITIES
Financial liabilities at fair value
through p/l
Derivative financial instruments — —
Other financial liabilities -
Group financial liabilities, total -
10 Property, plant and equipment
EURm
Right-of-use
assets
1)
Land and
buildings
Plant and
equipment
2)
Total
At 1 January
Cost
Accumulated depreciation - - - -
Net carrying amount at 1 January
Carrying amount at 1 January
Additions —
Disposals - - - -
Depreciation - - - -
Exchange dierences -
Carrying amount at 31 December
At 31 December
Cost
Accumulated depreciation - - - -
Net carrying amount at 31 December
EURm
Right-of-use
assets
1)
Land and
buildings
Plant and
equipment
2)
Total
At 1 January
Cost
Accumulated depreciation - - - -
Net carrying amount at 1 January
Net carrying amount at 1 January
Business acquisitions
Additions
Disposals - — - -
Depreciation - - -
Exchange dierences —
Net carrying amount at 31 December
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FINANCIAL STATEMENTS 2021
2020
EURm
Right-of-use
assets
1)
Land and
buildings
Plant and
equipment
2)
Total
At 31 December
Cost
Accumulated depreciation - - - -
Net carrying amount at 31 December
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.
More information on leases is in note 27 Other liabilities.
2)
Equipment in dierent segments comprise IT equipment and furniture.
3)
The opening balances for year 2021 include minor adjustments due to changes between line items.
11 Investment property
EURm
At 1 January
Cost
Accumulated depreciation - -
Accumulated impairment losses - -
Net carrying amount at 1 January
Net carrying amount at 1 January
Additions
Disposals - -
Depreciation — -
Impairment losses —
Net gains and losses from fair value adjustments —
Other changes - —
Exchange dierences
Net carrying amount at 31 December
EURm
Rental income from investment property
Property rented out under operating lease
Non-cancellable minimum rental
- not later than one year
- later than one year and not later than five years
- later than five years
Total
Expenses arising from investment property
- direct operating expenses arising from investment property
generating rental income during the period -
- direct operating expenses arising from investment property not
generating rental income during the period - -
Total -
Fair value of investment property at 31 December
Fair values for the Group’s investment property are described in the accounting policies of the
Group. In the hierarchy of fair values the investment property falls under levels 2 and 3.
The premises in investment property for different 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.
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FINANCIAL STATEMENTS 2021
12 Intangible assets
EURm Goodwill
Customer
relations Trademark
Work in
progress
Other
intangible
assets Total
At 1 January
Cost
Accumulated
amortisation — - - — - -
Net carrying amount
at 1 January
Net carrying amount at
1 January
Business acquisitions - — — —
Additions — —
Disposals — - — - - -
Amortisation — - — — - -
Transfers from WIP — — — - —
Exchange dierences
Net carrying amount
at 31 December
At 31 December
Cost
Accumulated
amortisation — - - — - -
Net carrying amount
at 31 December
EURm Goodwill
Customer
relations Trademark
Work in
progress
Other
intangible
assets Total
At 1 January
Cost
Accumulated
amortisation — - - — - -
Net carrying amount
at 1 January
Net carrying amount
at 1 January
Business acquisitions
Additions — — —
Disposals — - — — - -
Amortisation — - — — - -
Exchange dierences - - - -
Net carrying amount
at 31 December
At 31 December
Cost
Accumulated
amortisation — - - — - -
Net carrying amount
at 31 December
Goodwill is split between the segments as follows:
If
Topdanmark
Hastings
Mandatum
Total
The useful life for customer relations in the Group is 3–10 years. They are amortised using
the straight-line method. The useful life of trademark is deemed indefinite and it will not be
amortised. Other intangible assets in all segments comprise mainly IT software. Amortisations
and impairment losses are included in the income statement item Other operating expenses.
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FINANCIAL STATEMENTS 2021
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, Hastings Group
and Mandatum Group.
The recoverable amounts for If, Hastings and Mandatum have been determined by using a
discounted cash flow model. The model is based on best estimates of companies’ management
of both historical evidence and financial conditions such as premiums, claims, reinsurance,
margins, interest rates, capital structure and income and cost development. The first three years
of the forecast period is based on the budgets of the companies, which reflect management’s
view of future development. The value in use model for Mandatum is greatly influenced by
the long-term development of insurance liabilities, affecting 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 8.7 per cent, for Hastings 7.2 per cent and for Mandatum Life 9.7 per cent. The cost
of capital is defined based on CAPM model from external sources to reflect the risk of each
company relative to the market.
Forecasts for If, approved by the management, cover years 2022–2024. The cash flows beyond
that have been extrapolated using a 2 per cent growth rate. Hastings’ growth rate for years
beyond 2027 and Mandatum’s growth rate for years beyond 2031 is also 2 per cent, as it is
believed to be close to expected inflation in both cases.
For Mandatum, the recoverable amount exceeds its carrying amount by some EUR 390
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 1 per cent growth rate could lead to a situation where
the recoverable amount of the entity would equal its carrying amount. For Hastings, the
recoverable amount significantly exceeds its carrying amount, and even a material change in the
assumptions would not result in the carrying amount exceeding its recoverable 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 determining 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 2,146 million on the balance sheet date exceeds its
carrying amount in the Group.
Sensitivity analysis
Impact on the present value from the following changes (EUR bn):
If:
Long-term Combined ratio +2.5 p.p. -
Long-term Combined ratio -2.5 p.p.
Long-term growth rate -1 p.p. -
Long-term growth rate +1 p.p.
Cost of equity +1 p.p. -
Cost of equity -1 p.p.
Mandatum:
Long-term growth rate -1 p.p. -
Long-term growth rate +1 p.p.
Cost of Equity +1 p.p. -
Cost of Equity -1 p.p.
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FINANCIAL STATEMENTS 2021
13 Investments in associates and joint ventures
Associates and joint ventures that have been accounted
for by the equity method at 31 December 2021
EURm
Name Domicile
Carrying
amount
Fair
value*
)
Interest
held %
Associates
Nordax Holding AB Sweden
Precast Holding Oy Finland
CAP Group AB Sweden
SOS International A/S Denmark
Bornholms Brandforsikring A/S Denmark
P/S Ejendomsholding Denmark
Banemarksvej Denmark
Joint ventures
Margretheholm P/S Denmark
Havneholmen P/S Denmark
P/S Ottilia København Denmark
Associates and joint ventures that have been accounted
for by the equity method at 31 December 2020
EURm
Name Domicile
Carrying
amount
Fair
value*
)
Interest
held %
Associates
Nordea Bank Abp Finland
Nordax Holding AB Sweden
Precast Holding Oy Finland
CAP Group AB Sweden
SOS International A/S Denmark
Bornholms Brandforsikring A/S Denmark
P/S Ejendomsholding Denmark
Banemarksvej Denmark
Joint ventures
Margretheholm P/S Denmark
Havneholmen P/S Denmark
P/S Ottilia København Denmark
*
)
Published price quotation
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FINANCIAL STATEMENTS 2021
Changes in investments in associates and in joint ventures
EURm Nordea
Other associates
and joint ventures Total Nordea
Other associates
and joint ventures Total
At 1 January
Share of loss/profit
Valuation loss on dividend distribution of associate shares
*
)
— — — - — -
Impairment loss on Nordea shares — — — - — -
Reversal of impairment loss on Nordea shares — — — —
Additions — —
Disposals - - - -
Changes in the equity of associates - - - - -
Exchange dierences — - - —
Reclassification as non-current assets held for sale - — - — — —
At 31 December —
*
)
Nordea has been consolidated with equity method until 25 October 2021, after which Nordea’s shares have been reclassified in accordance IFRS 5 to non-current assets held for sale. Comparative year’s 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 11 November 2020, and EUR -40 million from recycling of Nordea’s
previously recognised other comprehensive income from equity to the profit or loss.
The carrying amount of investments in associates included goodwill EUR 76 million (122).
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FINANCIAL STATEMENTS 2021
Changes in holding of Nordea shares in 2021
In May, Sampo sold 162 million Nordea shares at a price of EUR 8.50 per share. Gross proceeds
were EUR 1,377 million. A sales gain of EUR 93 million from the transaction was recognised as a
reversal of previously made impairment losses. After the transaction, Sampo held 480,924,782
Nordea shares, corresponding to 11.87 per cent of all shares and voting rights in Nordea.
In September, Sampo sold 73 million Nordea shares at a price of EUR 10.20 per share. Gross
proceeds were EUR 745 million. A sales gain of EUR 144 million from the transaction was
recognised as a reversal of previously made impairment losses. After the transaction, Sampo
held 407,924,782 Nordea shares, corresponding to 10.07 per cent of all shares and voting rights
in Nordea.
In October 2021, Sampo’s management expressed its commitment to sell the remaining
shares and on 24 October 2021 an advanced bookbuild offer for an additional sell of shares
was initiated. On 25 October, Sampo sold 162 million Nordea shares at a price of EUR 10.65
per share. Gross proceeds were EUR 1 725 million. A sales gain of EUR 368 million from the
transaction was recognised as a reversal of previously made impairment losses. After the
transaction, Sampo holds 245,924,782 Nordea shares, corresponding immediately after the
transaction to 6.07 per cent of all shares and voting rights in Nordea.
As Nordea’s carrying amount will be recovered principally through a sale transaction rather
than through continuing use, Nordea shares have been reclassified under IFRS 5 Non-current
assets held for sale and discontinued operations in the financial statements for 2021. Additional
information about the reclassification can be found in note 34 Non-current assets held for
sale. In accordance with the standard, the shares were reclassified in the balance sheet as its
own line item ’Non-current assets held for sale’ and measured at the consolidated book value
at the reclassification date. Immediately before the reclassification, the reversal of remaining
impairment losses EUR 311 million was recognised in the income statement, as well as a recycling
of remaining other comprehensive income EUR -90 million.
Until the reclassification date, Nordea was accounted for under IAS 28 Investments in associates
and joint ventures.
Financial information on Nordea during comparative year 2020
EURm
Assets
Liabilities
Goodwill included in the assets
Revenue
Other comprehensive income items -
Comprehensive income statement
Reconciliation of Nordea’s carrying amount
to Nordea’s financial information
EURm
Net assets of Nordea
Sampo’s share of 15.87%
Share of impairment loss exceeding the allocations -
Total carrying amount
Changes in holding of Nordea shares in 2020
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 held
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 made a thorough assessment of facts and circumstances,
including that Sampo was still the biggest single shareholder who had 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 concluded that despite the decrease in the
ownership, the significant influence continued 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.
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FINANCIAL STATEMENTS 2021
14 Financial assets
Group’s financial assets comprise investments in derivatives, financial assets designated as at
fair value through p/l, loans and receivables and available-for-sale financial assets. 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
Derivative financial instruments
Loans and receivables
Financial assets available-for-sale
If, total
Topdanmark
Derivative financial instruments
Financial assets at fair value through p/l
Loans and receivables
Topdanmark, total
Hastings
Financial assets at fair value through p/l
Financial assets available-for-sale
Hastings, total
EURm
Mandatum
Derivative financial instruments
Loans and receivables
Financial assets available-for-sale
Assets held for sale - —
Mandatum, total
Holding
Derivative financial instruments
Financial assets available-for-sale
Investments in subsidiaries
Holding, total
Elimination items between segments - -
Group financial assets, total
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FINANCIAL STATEMENTS 2021
Derivative financial instruments
Fairvalue
Fairvalue
EURm
Contract/
Notional Amount Assets Liabilities
Contract/
Notional amount Assets Liabilities
Derivatives held for trading
Interest rate derivatives
OTC derivatives
Interest rate swaps
Inflation cover —
Total interest rate derivatives
Foreign exchange derivatives
OTC derivatives
Currency forwards
Currency options, bought and sold —
Total foreign exchange derivatives
Equity derivatives
OTC derivatives
Equity futures — — — —
Other — — —
Total equity derivatives —
Total derivatives held for trading
Derivatives held for hedging
Fair value hedges
Currency forwards — —
Total derivatives held for fair value hedging
Cash flow hedges
Currency forwards — —
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 risk in available-for-sale financial assets. The interest elements of foreign exchange 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 32 (-31). Net result from hedged risks in fair
value hedges of available for sale financial assets amounted to EURm -32 (31).
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FINANCIAL STATEMENTS 2021
Other financial assets
EURm
Financial assets designated as at fair value through p/l
Debt securities
Equity securities
Total financial assets designated as at fair value through p/l
Loans and receivables
Financial assets available-for-sale
Debt securities
Equity securities
Total financial assets available-for-sale
Group other financial assets, total
Financial assets available-for-sale include impairment losses EUR 221 million (383).
Total
Assets held for sale in Mandatum - —
Group’s financial assets, total
Loans and receivables includes both assets recognised at amortised cost and assets recognised at fair
value through p/l.
15 Change in fair values of financial assets
EURm
Fairvalue
Fairvalue
Change
Financial asset
Financial assets measured at amortised cost
Loans and receivables -
Deposits -
Total -
Financial assets measured at fair value
Equity securities
Debt securities -
Funds
Derivatives -
Loans guaranteed by mortgages and other loans
Deposits -
Total -
Financial assets at fair value through p/l related to
unit-linked insurance
Equity securities
Debt securities
Funds
Other
Total
Group financial assets, total
Financial assets measured at amortised cost
To determine the appropriate classification of financial assets under IFRS 9, the entity assesses
the contractual cash flows characteristics of any financial asset. Financial assets of which the
contractual cash flows give rise to solely payments of principal and interest (SPPI criteria,
solely payments of principle and interest) on the principal amount outstanding, meet the SPPI
test. IFRS 9 defines the terms “principal” as being the fair value of the financial asset at initial
recognition and the “interest” as being compensation for the time value of money, and the
credit risk associated with the principal amount outstanding during a particular period of time.
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FINANCIAL STATEMENTS 2021
All assets classified currently as available for sale, including both equity and debt instruments,
are anticipated to be classified as at fair value through profit or loss. Of the financial assets
classified currently as loans and receivables, including deposits, totalling 740 EURm (829
EURm), 476 EURm passed the SPPI test as of 31 December 2021 (280 EURm).
Based on an analysis, there are no significant credit risk concentrations related to financial
instruments that meet the SPPI criterion.
Financial assets measured at amortised cost, meeting the SPPI test, are presented by credit
rating in the following table:
2021
EURm AA+ - AA- BB+ - BB- B+ - B-
No credit
rating Total
Loans and receivables —
Deposits — — — — —
Total —
2020
EURm AA+ - AA- BB+ - BB- B+ - B-
No credit
rating Total
Loans and receivables —
Deposits — — —
Total —
The table has been prepared based on a preliminary analysis on business models likely to
be applied under IFRS 9. The final classification of financial assets may change before the
implementation of IFRS 9 on 1 January 2023, when the Group finalises its more detailed analysis.
Main part of the financial assets meeting the SPPI criterion are unrated, so it is not possible to
assess whether they are low credit risk or not. Since the amount of financial assets meeting
the SPPI criterion, 476 EURm (280 EURm) is minor of the total financial assets 28,140 EURm
(26,940 EURm), the credit risk is considered not to be significant. Their carrying amount is
assessed to be best estimate of their fair value.
16 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.
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.
Fair values are “clean” fair values, i.e. less interest accruals.
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 cash flows 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
example, the method based on the cash flows 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.
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FINANCIAL STATEMENTS 2021
Fair value
EURm
Carrying
amount Level Level Level Total
FINANCIAL ASSETS AT
31 DECEMBER 2021
Financial assets at fair value
Derivative financial instruments
Interest rate swaps — —
Foreign exchange derivatives — —
Total —
Financial assets at fair value
through p/l
Equity securities —
Debt securities
Investment funds — —
Total
Financial assets designated
as at fair value through p/l
Deposits — —
Debt securities — —
Debt securities (unit-trusts) —
Total —
Financial assets related to
unit-linked insurance
Equity securities
Debt securities
Funds
Derivative financial
instruments
— —
Other assets —
Total
Fair value
EURm
Carrying
amount Level Level Level Total
Financial assets
available-for-sale
Equity securities
Debt securities
Other assets
Total
Total financial assets at fair value
Other financial assets
Financial assets at
amortised cost
Loans and receivables — —
Total
Assets held for sale in Mandatum -
Group’s financial assets, total
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FINANCIAL STATEMENTS 2021
Fair value
EURm
Carrying
amount Level Level Level Total
FINANCIAL LIABILITIES AT
31 DECEMBER 2021
Financial liabilities at fair value
Derivative financial instruments
Interest derivatives — —
Equity derivatives — —
Foreign exchange derivatives —
Other derivatives — —
Total —
Financial liabilities designated
as at fair value through p/l
Deposits — —
Total financial liabilities at
fair value —
Other financial liabilities
Subordinated debt securities
Subordinated loans —
Debt securities in issue
Bonds —
Other
Borrowings on revolving
credit facility — —
Total other liabilities
Group financial liabilities, total
Fair value
EURm
Carrying
amount Level Level Level Total
31 December 2020
Financial assets at fair value
Derivative financial instruments
Interest rate swaps — —
Foreign exchange derivatives — —
Total — —
Financial assets at fair value
through profit or loss
Equity securities —
Debt securities
Total
Financial assets designated as at
fair value through profit or loss
Deposits — —
Financial assets related to unit-
linked insurance
Equity securities
Debt securities
Funds
Derivative financial
instruments — —
Other assets — —
Total
Financial assets
available-for-sale
Equity securities —
Debt securities
Other assets
Total
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FINANCIAL STATEMENTS 2021
Fair value
EURm
Carrying
amount Level Level Level Total
Total financial assets at
fair value
Other financial assets
Financial assets at
amortised cost
Loans and receivables —
Group financial assets, total
Fair value
EURm
Carrying
amount Level Level Level Total
FINANCIAL LIABILITIES AT
31 DECEMBER 2020
Financial liabilities at fair value
Derivative financial instruments
Interest derivatives — —
Foreign exchange derivatives — —
Total — —
Financial liabilities designated
as at fair value through p/l
Deposits — —
Total financial liabilities at
fair value —
Other financial liabilities
Subordinated debt securities
Subordinated loans —
Fair value
EURm
Carrying
amount Level Level Level Total
Debt securities in issue
Bonds —
Total other financial liabilities —
Group financial liabilities, total
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
Equity securities —
Debt securities — —
Financial assets available-for-sale
Debt securities
Transfers are based mainly on the changes in trading volume information provided by an
external service provider.
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FINANCIAL STATEMENTS 2021
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 different base currencies. In If, a 10 percentage point depreciation
of all other currencies against SEK would result in an increase recognised in profit/loss of
EUR 34 million (21) and in a decrease recognised directly in equity of EUR -24 million (-18). In
Topdanmark, a 10 percentage depreciation of all other currencies against DKK would result
in a decrease recognised in profit/loss of EUR -4 million (3), but would not have an impact on
equity. In Mandatum, a 10 percentage point depreciation of all other currencies against EUR
would result in an increase recognised in profit/loss of EUR 32 million (55) and in a decrease
recognised directly in equity of EUR -45 million (-66). In Holding, a 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 -65 million (-31). 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 different
market risk scenarios is presented below. The effects represent the instantaneous effects of a
one-off change in the underlying market variable on the fair values on 31 December 2021.
The sensitivity analysis includes the effects of derivative positions. All sensitivities are calculated
before taxes.
The debt issued by Sampo plc is not included.
Interest rate Equity
Other
financial
assets
parallel
shiftdown
parallel
shiftup
fallin
prices
fallin
prices
Eect recognised in profit/loss - - -
Eect recognised directly in equity - - -
Total eect - - -
Maximum exposure to credit risk
The carrying amount of financial assets in the balance sheet EUR 23,321 million (24,420) added
by the amount of guarantees and investment commitments totalling EUR 1 820 million (1,256)
represents the maximum exposure to credit risk.
Sensitivity analysis of level 3 financial
instruments measured at fair value
EURm
Carrying
amount
Eect of
reasonably
possible
alternative
assumptions
(+/-)
Carrying
amount
Eect of
reasonably
possible
alternative
assumptions
(+/-)
Financial assets
Financial assets available-for-sale
Equity securities - -
Debt securities - -
Funds - -
Total - -
The value of financial assets regarding the debt security instruments has been tested by assuming
a rise of 1 per cent 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 affect profit or loss.
On the basis of these alternative assumptions, a possible change in interest levels would cause
a decrease of EUR -2 million (-3) for the debt instruments, and EUR -294 million (-259) valuation
loss for other instruments in the Group’s other comprehensive income. The reasonably possible
effect, proportionate to the Group’s equity, would thus be 2.3 per cent (2.3).
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FINANCIAL STATEMENTS 2021
17 Movements in level 3 financial instruments measured at fair value
EURm AtJan
Totalgains
lossesinincome
statement
Totalgains
lossesrecorded
inothercompre-
hensiveincome Purchases Sales
Transfersto
levelsand AtDec
Gainslosses
includedinpl
forfinancial
assets
Dec
FINANCIAL ASSETS 2021
Financial assets held for trading
Debt securities — - -
Financial assets related to unit-linked
insurance contracts
Equity securities — - —
Debt securities — - -
Funds — - —
Total — - -
Financial assets available-for-sale
Equity securities — - -
Debt securities - —
Funds - —
Total - -
Total financial assets measured at fair value - -
In 2021, EUR 1,004 million of the transfers relate to Topdanmark’s structured credit products (CLOs) for which the market could be defined as active again, in accordance with IFRS 13, and which
therefore have been transferred back to level 2 from level 3.
2021
EURm Realised gains and losses Fair value gains and losses Total
Total gains or losses included in profit or loss for the financial year
Total gains or losses included in profit or loss for assets held at the end of the financial year
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FINANCIAL STATEMENTS 2021
EURm AtJan
Totalgains
lossesinincome
statement
Totalgains
lossesrecorded
inothercompre-
hensiveincome Purchases Sales
Transfersto
levelsand AtDec
Gainslosses
includedinpl
forfinancial
assets
Dec
FINANCIAL ASSETS 2020
Financial assets held for trading
Debt securities - -
Total - -
Financial assets related to unit-linked
insurance contracts
Equity securities — - - -
Debt securities - -
Funds - — - -
Total - - - -
Financial assets available-for-sale
Equity securities - - -
Debt securities - - -
Funds - -
Total - - -
Total financial assets measured at fair value - - -
In 2020, due to the COVID-19 situation, Topdanmark transferred structured products (CLOs) from levels 1 and 2 to level 3, implying valuation models based on non-observable inputs.
2020
EURm Realised gains and losses Fair value gains and losses Total
Total gains or losses included in profit or loss for the financial year - -
Total gains or losses included in profit or loss for assets held at the end of the financial year - -
Gains and losses are included either in the consolidated income statements’ net investment income or other comprehensive income statements’ exchange differences and fair value changes of
available-for-sale financial assets.
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FINANCIAL STATEMENTS 2021
18 Deferred tax assets and liabilities
Changes in deferred tax during the financial year 2021
EURm 1 Jan
Recognised in
comprehensive
income statement Recognised in equity Exchange dierences 31 Dec
Deferred tax assets
Tax losses carried forward -
Changes in fair values - -
Pension liabilities - -
Other deductible temporary dierences -
Total - -
Netting of deferred taxes -
Deferred tax assets in the balance sheet, total
Deferred tax liabilities
Depreciation dierences and untaxed reserves - —
Changes in fair values
Other taxable temporary dierences
Total
Netting of deferred taxes -
Deferred tax liabilities in the balance sheet, total
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FINANCIAL STATEMENTS 2021
Changes in deferred tax during the financial period 2020
EURm 1 Jan
Business
acquisitions
Recognised in
comprehensive
income statement
Recognised in
equity
Exchange
dierences 31 Dec
Deferred tax assets
Tax losses carried forward — —
Changes in fair values — — —
Pension liabilities — -
Other deductible temporary dierences -
Total -
Netting of deferred taxes -
Deferred tax assets in the balance sheet, total
Deferred tax liabilities
Depreciation dierences and untaxed reserves — —
Changes in fair values -
Other taxable temporary dierences -
Total -
Netting of deferred taxes -
Deferred tax liabilities in the balance sheet, total
In Sampo plc, EUR 48 million of deferred tax asset has not been recognised on unused tax losses. The first losses will expire at the end of fiscal year 2021.
In Mandatum, EUR 2 million of deferred tax asset has not been recognised on unused tax losses.
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FINANCIAL STATEMENTS 2021
19 Taxes
EURm
Profit before tax
Tax calculated at parent company’s tax rate - -
Dierent tax rates in foreign jurisdictions - -
Income from associates not subject to tax -
Income not subject to tax
Non-deductible expenses - -
Tax losses for which no deferred tax asset has been recognised - -
Changes in tax rates - -
Tax from previous years - -
Total - -
20 Components of other comprehensive income
EURm
Other comprehensive income:
Items reclassifiable to profit or loss
Exchange dierences
Available-for-sale financial assets
Gains/losses arising during the year
Reclassification adjustments (IAS 1.93) - -
The share segregated Suomi portfolio
Business acquisition — -
Share of associate’s other comprehensive income
Taxes - -
Total items reclassifiable to profit or loss, net of tax
EURm
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
21 Other assets
EURm
Interests
Assets arising from direct insurance operations
Assets arising from reinsurance operations
Settlement receivables
Deferred acquisition costs*
)
Assets related to Patient Insurance Pool
Other
Group other assets, total
Item Other comprise e.g. assets held for resale, asset management fee receivables and prepaid
pensions.
Other assets include non-current assets EUR 139 million (58).
*
)
Change in deferred acquisition costs in the period
EURm
At 1 January
Business acquisitions
Net change in the period -
Exchange dierences -
At 31 December
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FINANCIAL STATEMENTS 2021
22 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
Incurred and reported losses
Incurred but not reported losses (IBNR)
Provisions for claims-adjustment costs —
Provisions for annuities and sickness benefits
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 — — —
Unwinding of discounted annuities - - - —
Change in provision - -
Exchange dierences -
At 31 December
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FINANCIAL STATEMENTS 2021
The tables below show the cost trend for the claims for different 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 is in the risk management note 36.
If
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm Total
At the close of the claims year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later
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 6,675
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FINANCIAL STATEMENTS 2021
If
Claims cost trend of P&C insurance
Claims costs after reinsurance
Estimated claims cost
EURm Total
At the close of the claims year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
Ten years later
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
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105
FINANCIAL STATEMENTS 2021
Topdanmark
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm Total
At the close of the claims year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
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
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106
FINANCIAL STATEMENTS 2021
Topdanmark
Claims cost trend of P&C insurance
Claims costs after reinsurance
Estimated claims cost
EURm Total
At the close of the claims year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
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
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107
FINANCIAL STATEMENTS 2021
Hastings
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm Total
At the close of the claims year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
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
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FINANCIAL STATEMENTS 2021
Hastings
Claims cost trend of P&C insurance
Claims costs after reinsurance
Estimated claims cost
EURm Total
At the close of the claims year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Eight years later
Nine years later
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
Reinsurers’ share of outstanding claims liabilities
Total provision reported in the BS of Hastings
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FINANCIAL STATEMENTS 2021
Life insurance liabilities from insurance and investment contracts
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for unearned premiums
Insurance contracts —
Investment contracts — —
Provision for claims outstanding
Group liabilities from insurance and investment contracts, total
Liabilities related to available for sale assets in Mandatum -
Group’s liabilities for insurance and investment contracts, total
Change in liabilities from insurance contracts
EURm
Gross contracts
with discretionary
participation features
At 1 January 2021
Premiums
Claims paid -
Expense charge -
Guaranteed interest
Bonuses
Other -
Total life insurance liabilities at 31 December 2021
Liabilities related to available for sale assets in Mandatum -
Total life insurance liabilities at 31 December 2021
EURm
Gross contracts
with discretionary
participation features
At 1 January 2020
Premiums
Claims paid -
Expense charge -
Guaranteed interest
Bonuses -
Other -
Total life insurance liabilities at 31 December 2020
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FINANCIAL STATEMENTS 2021
Life insurance liabilities from investment contracts
EURm
Investment contracts with discretionary
participation features
The change between financial years is mainly due to the claims paid.
Change in liabilities from life insurance investment contracts
EURm
Contracts with
discretionary
participation
features
At 1 January 2020 26
Other
Life insurance liabilities from investment contracts
at 31 December 2020, total 28
EURm
Contracts with
discretionary
participation
features
At 1 January 2020 25
Other
Life insurance liabilities from investment contracts
at 31 December 2020, total 26
The liabilities at 1 January and at 31 December include the future bonus reserves and the
effect 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 36.
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-off for an investment contract with DPF. These
investment contracts have been valued like insurance contracts.
Reconciliation to the consolidated insurance and investment
contract liabilities
EURm
P&C Insurance
Life insurance
Group consolidated insurance and
investment contracts, gross, total 20,379 19,956
Liabilities related to available for sale assets in
Mandatum - —
Group consolidated insurance and
investment contracts, gross, total 20,369 19,956
23 Liabilities from unit-linked insurance
and investment contracts
EURm
Unit-linked insurance contracts
Unit-linked investment contracts
Life insurance liabilities
Total 19,737 16,285
Liabilities related to available for sale assets in
Mandatum - —
Group liabilities from unit-linked insurance and
investment contracts, total 19,550 16,285
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FINANCIAL STATEMENTS 2021
24 Subordinated debts and other financial liabilities
The segment financial liabilities include subordinated debts, derivatives, debt securities in issue
and other financial liabilities.
If
EURm
Derivate financial instruments
Subordinated debt securities
Subordinated loans Maturity Interest
Subordinated loan, 2021
(nominal value 1,500 MSEK) years
monthStibor
—
Subordinated loan, 2018
(nominal value 1,000 MSEK) perpetual
monthStibor
Subordinated loan, 2016
(nominal value 1,500 MSEK) years
monthStibor
—
Subordinated loan, 2016
(nominal value 500 MSEK) years —
Subordinated loan, 2011
(nominal value EURm 110) years —
Total subordinated debt securities
If, total financial liabilities
The loan of EUR 110 million was issued in 2011 with fixed interest rate terms for the first ten
years. The loan was redeemed on the first call date in December 2021 (ten years after the issue
date). Up until redemption, the loan was listed on the Luxembourg Stock Exchange. The loan
was approved by the supervisory authority as being utilisable for solvency purposes.
The loan of SEK 1,500 million was issued in 2016 with variable interest rate terms. The loan
was redeemed on the first call date in December 2021 (five years after the issue date). Up until
redemption, the loan was listed on the Luxembourg Stock Exchange.
The loan of SEK 500 million was issued in 2016 with fixed interest rate terms for the first five
years. The loan was redeemed on the first call date in December 2021 (five years after the issue
date). Up until redemption, the loan was listed on the Luxembourg Stock Exchange.
The loan of SEK 1,000 million was issued in 2018 with variable interest rate terms. The loan
includes terms stating the right of redemption after five years and at any interest payment date
thereafter. The loan is listed on the Luxembourg Stock Exchange.
The loan of SEK 1,500 million was issued in 2021 with variable interest rate terms. The loan
includes terms stating the right of redemption after five years, at any date for a three-month
period after the first five years and thereafter at any interest payment date. The loan is listed on
the Luxembourg Stock Exchange.
Topdanmark
EURm
Derivative financial instruments
Subordinated debt securities
Subordinated loans Maturity Interest
Subordinated loan, 2021
(nominal value 1,000 MDKK)
monthCibor
—
Subordinated loan, 2020
(nominal value 500 MDKK)
kkCibor
Subordinated loan, 2017
(nominal value 400 MDKK) bullet
monthCibor
Subordinated loan, 2015
(nominal value 850 MDKK)
monthCibor
—
Total subordinated debt securities
Other financial liabilities
Topdanmark, total financial liabilities
Subordinated loans are wholly included in Topdanmark’s own funds. Approximately
EUR 220 (18) million euro (DKK 1,633 million) of the subordinated loans are subscribed by If.
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FINANCIAL STATEMENTS 2021
Hastings
EURm
Debt securities in issue
Bonds
Other financial liabilities —
Hastings, total financial liabilities
During the financial period Hastings has signed a revolving credit facility with financial
institution totalling EUR 65 million of which at the end of reporting period EUR 54 million is
undrawn. The revolving credit facility is terminating on 23 November 2023, but the contract
contains an extension option. In addition, Hastings has an undrawn credit facility with Sampo
Plc totalling EUR 89 million with maturity date 29 October 2026.
Mandatum
EURm
Derivative financial instruments (note 14)
Subordinated debt securities
Subordinated loan, 2019 (nominal value EURm 250 )
Subordinated loan, 2002 (nominal value EURm 100 )
Total subordinated debt securities
Mandatum, total financial liabilities
Mandatum Life issued in 2002 EUR 100 million 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 Financial 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 EUR 250 million. 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
include 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
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FINANCIAL STATEMENTS 2021
Change in liabilities from financing activities
EURm January Incomingcashflows Outgoingcashflows Exchangedifferences Other December
Bonds and subordinated loans -
EURm January Incomingcashflows Outgoingcashflows Exchangedifferences Other December
Bonds and subordinated loans -
25 Provisions
EURm
At 1 January 2021
Additions
Amounts used during the period -
Unused amounts reversed during the period -
Exchange rate dierences
At 31 December 2021
Current (less than 1 year)
Non-current (more than 1 year)
Total
EUR 3 million (7) of the provision consist of funds reserved for futures expenses for previously
implemented or planned development of efficient administrative and claims-adjustment
processes and structural changes in distribution channels, resulting in organisational changes
that affect all business areas. In addition, the item includes a provision of about EUR 6 million
(12) for lawsuits and other uncertain liabilities.
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FINANCIAL STATEMENTS 2021
26 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
2021 2020
Defined benefit pension obligations, including social costs etc.
Fair value of plan assets
Net liability recognised in the balance sheet
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, referring to a life-long pension after anticipated retirement age.
All employees in Norway born in 1957 or earlier and who were employed by If in 2013 are
entitled to a temporary pension before the anticipated retirement age. The retirement age for
receiving early retirement pension is normally 65 years. Following a complete service period the
early retirement pension is payable at a rate of 70% of the pensionable salary.
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 sufficient
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.
However, given the insurers’ high consolidation ratio, the risk that If will be forced to take any
such action is low. 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. New and existing asset categories are evaluated on an ongoing basis
in order to diversify the asset portfolios with a view to optimise 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, longevity, the investment risk associated with the
plan assets and the fact that the choice of discount interest rate affects 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
recognised 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 effect 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%).
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FINANCIAL STATEMENTS 2021
Specification of employee benefit obligations by country
EURm Sweden Norway Total Sweden Norway Total
Recognised in income statement and other comprehensive income
Current service cost
Interest expense on net pension liability —
Total in income statement
Remeasurement of the net pension liability - — - - —
Total in comprehensive income statement - -
Recognised in balance sheet
Defined benefit pension obligations, including social costs etc.
Fair value of plan assets
Net liability (net assets) recognised in balance sheet -
Distribution by asset class
Bonds
Equities
Properties
Other
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FINANCIAL STATEMENTS 2021
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
Discount rate
Future salary increases
Price inflation
Mortality table DUS DUS K K
Average duration of pension liabilities years years years years
Expected contributions to the defined benefit plans during 2022 and 2021
Sensitivityanalysisofeffectofreasonablypossiblechanges
Sweden Norway Total Sweden Norway Total
Discount rate, +0.50% - - - - - -
Discount rate, -0.50%
Future salary increases, +0.25% —
Future salary increases, -0.25% - - - — -
Expected longevity, +1 year
EURm Fundedplans Unfundedplans Total Fundedplans Unfundedplans Total
Distribution of obligations on funded and unfunded plans
Defined benefit pension obligations, including social costs etc.
Fair value of plan assets — —
Net pension liability (net assets) recognised in the balance sheet -
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FINANCIAL STATEMENTS 2021
Analysis of the change in net liability recognised in the balance sheet
EURm
Pension liabilities:
At the beginning of the year
Current cost
Interest cost
Actuarial gains (-)/losses (+) on financial assumptions -
Actuarial gains (-)/losses (+), experience adjustments -
Exchange dierences on foreign plans -
Benefits paid - -
Business acquisitions
—
Defined benefit pension obligations on Dec 31, excl. social security
Social security costs
Defined benefit plans on Dec 31, incl. social security costs etc.
Reconciliation of plan assets:
At the beginning of the year
Interest income
Dierence between actual return and calculated interest income -
Contributions paid
Exchange dierences on foreign plans -
Benefits paid - -
Business acquisitions —
Plan assets at 31 December
Other short-term employee benefits
There are other short-term employee 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 2021 is EUR 98 million.
27 Other liabilities
EURm
Liabilities arising out of direct insurance operations
Liabilities arising out of reinsurance operations
Liabilities related to Patient Insurance Pool
Pension return tax
Tax liabilities
Premium taxes
Settlement liabilities
Interests
Leases
*
)
Prepayments and accrued income
Other
Group other liabilities, total
Item Other includes e.g. withholding taxes, social expenses related to Workers Compensation
insurance policies and employee benefits.
The non-current share of other liabilities is EUR 128 million (219).
*
)
The total eect of leases on the statement of cash flows was EUR -34 million (-39). Non-cash flow
additions from IFRS 16 leases to the balance sheet items were EUR 41 million (42).
EURm
Items recognised in the p/l from lease liabilities
Interest expenses - -
Expenses from short-term and low-value lease liabilities - -
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FINANCIAL STATEMENTS 2021
28 Contingent liabilities, commitments
and legal proceedings
EURm
O-balance sheet items
Guarantees
Investment commitments
IT acquisitions
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
Subsidiary shares
Cash and cash equivalents —
Total
EURm
Assets pledged as security for derivative contracts, carrying value
Investment securities
Cash and cash equivalents
Total
Assets pledged as security for insurance undertakings, carrying value
Investment securities —
Assets pledged as security for loans, carrying value
Shares in subsidiaries —
Assets pledged for other commitments, carrying value
Cash and cash equivalents —
Other financial commitments
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.
If P&C Insurance Holding Ltd and If P&C Insurance Ltd have separately entered into agreements
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. (changed name to Marlon Insurance Company Ltd., company
dissolved in July 2017) in favour of the Institute of London Underwriters. Marlon was sold during
2007, and the purchaser issued a guarantee in favour of the aforementioned companies in the If
Group for the full amount that they may be required to pay under these guarantees.
If P&C Insurance Company Ltd, a Finnish branch, has outstanding commitments to private
equity funds totalling EURm 3, 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.
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 If 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 provide support towards specific suppliers to fulfil Topdanmark EDB IV
ApS’ obligations in accordance with the contracts.
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FINANCIAL STATEMENTS 2021
Contingent liability
Entities within Hastings Group are subject to review by tax authorities in the UK and Gibraltar.
The Hastings Group commenced discussion with HMRC in December 2016 regarding aspects
of its business model and the allocation of certain elements of its profit between the Group’s
operating subsidiaries, Hastings Insurance Services Limited (’HISL’) in the UK and Advantage
Insurance Company Limited (’AICL’) in Gibraltar. During the year, management has engaged in
correspondence and meetings with HMRC. Management has reviewed current and previous tax
filings and considered the nature of the ongoing enquiries and does not consider it appropriate
to provide for any additional tax due. Hastings Group provides for potential tax liabilities that
may arise on the basis of the amount expected to be paid to the tax authorities having taken
into consideration any ongoing enquiries or reviews and based on guidance from professional
firms. The final amounts paid may differ from the amounts provided depending on the ultimate
resolution of such matters and any changes to the estimates or amounts payable in respect of
prior periods are reported through adjustments relating to prior periods. In the event that the
tax authorities do not ultimately accept the filed tax position, it is possible that the Hastings
Group will have an additional tax liability. However the ongoing nature of the enquiry means
that is its inherently difficult to predict a range of potential outcomes with certainty. Based on
the information received from HMRC to date, management does not believe that it is probable
that any additional amounts will ultimately become payable. Further information in respect of
the enquiries has therefore not been provided in accordance with IAS 37 on the grounds it is not
practicable to do so.
Legal proceedings
There are a number of legal proceedings against the Group companies outstanding on 31
December 2021, arising in the ordinary course of business. The companies estimate it unlikely
that any significant loss will arise from these proceedings.
29 Equity and reserves
Equity (1,000 shares)
Equity (1,000 shares)
The shares are divided into A and B classes, with the number of A shares being 179,000,000 at
minimum and 711,200,000 at maximum, and the number of B shares being 0 at minimum and
4,800,000 at maximum. Each A share entitles its holder to one vote and each B share entitles
its holder to five votes at a General Meeting of Shareholders. The shares have no nominal value.
At the end of financial year 2021, the number of A shares amounted to 545,611,894 and B shares
to 1,200,000 shares.
Treasury Shares (1,000 shares)
Own shares held by Sampo Plc (1,000 shares) —
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 differences.
Changes in the reserves and retained earnings are presented in the Group’s statement of
changes in equity.
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FINANCIAL STATEMENTS 2021
30 Related party disclosures
Related parties of Sampo Group include subsidiaries, associates and joint ventures. In addition,
related parties include, as mentioned below, key management personnel and their related
parties. Group’s subsidiaries are included in the note 33 and significant associates and joint
ventures in the note 13.
All intra-group transactions and balances are eliminated upon consolidation. The related
party transaction disclosed in the note include transactions with related parties that are not
eliminated in the preparation of consolidated financial statements.
Transactions with related parties are on an arm’s length basis.
Key management personnel and their related parties
The key management personnel in Sampo Group consists of the members of the Board
of Directors of Sampo plc, Chief Executive Officer (CEO) and Sampo Group’s Executive
Committee. Their related parties include close family members and the entities over which the
members of the key management personnel or their close family members have a control or
significant influence.
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 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 31).
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/Associates Nordea and Nordax
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.
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FINANCIAL STATEMENTS 2021
31 Incentive schemes
Long-term incentive schemes 2017 I–2020 I
The Board of Directors of Sampo plc has decided on the long-term incentive schemes 2017:1
and 2020:1 for the key employees of Sampo Group. The Board of Directors of Sampo plc has
authorised the Group CEO to decide on the allocation of incentive units, which are used to
determine the incentive reward. The Board of Directors of Sampo plc decides on the number
of incentive units allocated to the Group CEO and the Group Executive Committee members.
Some 115 persons were included in the long-term incentive schemes at the end of 2021.
The amount of the incentive reward is based on the share price development of the Sampo A
share, If P&C insurance margin (IM) and/or Sampo Group’s return on capital at risk (RoCaR).
The value of one calculated incentive unit is the trade-weighted average price of the Sampo
A share at the time period specified in the terms of the incentive scheme, reduced by the
dividend-adjusted starting price. The starting price of the incentive schemes varies between
EUR 32.94–44.10. The maximum value of one incentive unit varies between EUR 56.94–63.10.
In the 2017:1 incentive scheme, the calculation of the incentive reward furthermore takes into
account the outcome of two performance indicators. If the IM is at least 6 per cent, 60 per cent
of the incentive reward is paid. If the IM is between 4–5.99 per cent, 30 per cent of the incentive
reward is paid. If the RoCaR is at least risk-free return + 4 per cent, 40 per cent of the incentive
reward is paid. If the RoCaR is at least risk-free return + 2 per cent, but less than risk-free return
+ 4 per cent, 20 per cent of the incentive reward is paid. In the 2020:1 incentive scheme, the
calculation of the incentive reward furthermore takes into account the RoCaR. If the RoCaR is at
least risk-free return + 5 per cent, the reward is paid out in full. If the RoCaR 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
RoCaR is below risk-free return + 3 per cent, no incentive reward will be paid.
Each plan has three performance periods and incentive rewards are paid in cash in three
instalments. Identified staff shall buy Sampo A shares with 50 per cent of the amount of the
instalment after deducting income tax and other comparable charges. The shares are subject to
disposal restrictions for three years from the date when the instalment was paid. A premature
payment of the incentive reward may occur in the event of changes in the group structure. The
fair value of the incentive schemes is estimated by using the Black-Scholes pricing model.
I I I I
Terms approve*
)
Sep Sep Aug Aug
Granted (1,000) 31 Dec 2018 — —
Granted (1,000) 31 Dec 2019 — —
Granted (1,000) 31 Dec 2020 —
Granted (1,000) 31 Dec 2021
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 EUR
*
)
Starting price EUR
**
)
Dividend-adjusted starting price
EUR at 31 December 2021
Sampo A closing price EUR at
31 December 2021
Total intrinsic value, EURm
Total debt
Total cost for the financial period,
EURm (incl. social cost)
*
)
Grant dates vary
**
)
In the 2017:1 incentive scheme, the trade-weighted average price of the Sampo A share during ten
trading days from the adoption of the scheme and in the 2020:1 incentive scheme, the trade-weighted
average price of the Sampo A share during twenty-five trading days commencing the day after Sampo
plc’s publication of its Half-Year Financial Report in 2020.
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Long-term incentive scheme of Topdanmark
Topdanmark’s long-term 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 2021
Granted
Transferred - -
Exercised - - - -
Forfeited - -
At 31 December 2021
At 1 January 2020
Granted
Transferred -
Exercised - - - -
Forfeited - -
At 31 December 2020
Per granting
2017, exercise period January 2020–2022
2018, exercise period January 2021–2023
2019, exercise period January 2022–2024
2020, exercise period January 2023–2025
2021, exercise period January 2024–2026
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 tables below show option holder’s standing at the year end.
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Executiveboard Seniorexecutives Resigned Total
Average market price on date of exercise 2021
Average market price on date of exercise 2020
Fair value of granting 2021
Fair value of granting 2020
Fair value at 31 December 2021
Fair value at 31 December 2020
The fair value of the granting for the year has been calculated using the Black-Scholes model
assuming a share price of EUR 36 (42). 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 (22) p.a and the average life of the options approximately 4 years. The volatility
based on previous years’ volatility is still managements’ best estimate of the future volatility.
The strike prices are adjusted by dividend distribution for outstanding options.
At 31 December 2021, there were 324,000 options (331,000) 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 2021
was EUR 15 million (EUR 4 million) with a share-based payment liability of EUR 25 million (EUR
12 million) held at 31 December 2021.
Long Term Incentive Plan 2021
Certain management personnel of Hastings Group participate the Group’s Long Term Incentive Plan
(’LTIP’), which is a cash settled scheme. Vesting is subject to a three-year service period and the
achievement of certain performance conditions. Cash awards totalling EUR 12 million (EUR 0) were
granted in 2021 and EUR 1 million cash awards were forfeited. 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 39 million outstanding at 31 December 2021 (EUR 26 million).
Long Term Incentive Plan 2020
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 offered 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 2021.
Restricted Stock Awards 2021
Restricted Stock Awards are whereby certain individuals are granted cash awards conditional
upon their continued employment with the Group. The expected life is the contractual life of
the award adjusted to reflect management’s best estimate of holder behaviour. During 2021,
certain key management personnel were granted cash awards with a value of EUR 0.3 million
conditional upon continued employment with the Group, with the awards vesting in three
tranches (2022, 2023, 2024). There were cash awards with a value of EUR 3 million (EUR 4
million) outstanding at 31 December 2021.
Restricted Stock Awards 2020
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.
Capital Appreciation Plan
In the year ended 31 December 2021, certain key management personnel were invited to
participate in the Capital Appreciation Plan (’CAP’) under which they may be awarded up to
five free ordinary B shares in the Company for every ordinary B share that they purchase and
place into a trust. The total number of ordinary B shares placed into trust under this scheme
in December 2021 was 1.0 million (six weeks ended 31 December 2020: nil) and there were no
forfeits during the year (2020: nil). The additional matching awards of up to 5.0 million ordinary
B shares have the potential to vest in two tranches, with 50% being conditional upon a total
shareholder return (’TSR’) measure over a four-year period, and 50% being conditional upon
TSR over a five-year period, with the number of awards dependent upon the level of return
between a minimum and maximum target. At the end of each performance period, one half
of the awarded shares will vest, and one half will be deferred for 12 months before becoming
exercisable. The vesting is dependent on continuing service by the colleague over the period
of any deferment, and in its entirety the vesting of awarded shares will take place over a period
of four to six years. The TSR measure for these awards is calculated considering the dividends
paid over the period, the profit of the Group in the final year of the performance period and an
internal enterprise valuation model.
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FINANCIAL STATEMENTS 2021
32 Auditors’ fees
EURm
Auditing fees - -
Deloitte - —
Ernst & Young — -
Other -
Other fees -
Deloitte —
Ernst & Young — -
Other
Total - -
The AGM on 19 May 2021 elected Deloitte Oy as Sampo plc’s auditor.
The previous auditor was Ernst & Young Oy.
33 Investments in subsidiaries
Name Groupholding Carryingamount
If P&C Insurance Holding Ltd
If P&C Insurance Ltd
If P&C Insurance AS
Vertikal Helseassistanse AS
Viking Assistance Group AS
Topdanmark A/S *
)
Topdanmark Forsikring A/S
Topdanmark Liv Holding A/S
Topdanmark Livsforsikring A/S
Name Groupholding Carryingamount
Topdanmark Ejendom A/S
Hastings Group (Consolidated) Ltd
Hastings Group Holdings Limited
Hastings Group (Finance) plc
Hastings Group Limited
Advantage Global Holdings Limited
Hastings (Holdings) Limited
Mandatum Holding Oy
Mandatum Life Insurance Company Ltd
Mandatum Asset Management Oy
*
)
The Group’s ownership of votes.
During the financial year 2021, Sampo plc made an additional investment of EUR 68 million in
Topdanmark A/S, EUR 804 million in Hastings Group (Consolidated) Ltd and EUR 55 million in
Mandatum Holding Oy.
The table excludes dormant companies in Great Britain as well as property and housing
companies accounted for in the consolidated accounts, and other companies that are
insignificant to the consolidated financial statements.
Interests in unconsolidated structured entities
Mandatum Fund Management S.A. and Mandatum AM AIFM Ltd, which are part of Mandatum
Group, manage Mandatum’s funds and investments in limited partnership companies. Mandatum
Fund Management S.A. has outsourced the portfolio management of the investments it
manages to Mandatum Asset Management Ltd and Mandatum AM AIFM Ltd has its own
portfolio management and other operations. Mandatum Group receives management fees
from the unconsolidated investments and these fees are treated as commission income in the
financial statements. In addition, as an investor Mandatum Group receives investment profits
from the unconsolidated investments and these profits are booked as investment profits to
the asset class in which the investment is included on the balance sheet. Mandatum Group’s
investments in these funds were in total EUR 1,915 million as of 31 December 2021. These
investments are included in the investment assets on the balance sheet.
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34 Non-current assets held for sale
Sampo’s holding in Nordea
Sampo’s Board of Directors decided on new financial targets and focuses for creating long-
term value from P&C insurance operations in February 2021. As a part of this, an intention
to materially reduce Sampo’s holding in Nordea over the following 18 months was publicly
announced.
Under IFRS 5 Non-current assets held for sale and discontinued operations, a non-current asset
is classified as held for sale if its carrying amount will be recovered principally through a sale
transaction rather than through continuing use. The asset must be available for immediate sale
and its sale must be highly probable. The management needs, therefore, to be fully committed
to the sale and the sale should take place within next 12 months from the date of reclassification.
In October 2021, Sampo’s Board of Directors expressed their commitment to sell the remaining
shares, and on 24 October 2021, an additional sale of Nordea shares was initiated. On 25
October 2021, Sampo sold 162 million shares through accelerated bookbuild offer (ABO).
As a result of the sale, Sampo’s holding of Nordea shares and votes decreased below 10 per
cent. After the sale, Sampo holds 245,924,782 shares of Nordea which entitles to 6.20 per
cent of shares and votes. Management considered that the requirements set in IFRS 5 for the
reclassification were met for the remaining part of the shares.
After the sale Sampo’s management has assessed the consolidation of shareholding in Nordea
as an associate. Sampo considers to have a significant influence in the investment, because
Sampo continues to be the biggest single shareholder with the positions of chairman in
Nordea’s board of directors and member in the Nomination Board. Sampo’s management
concluded that despite the decrease in the ownership the significant influence continued to
exist at the date of reclassification. Therefore, the shares in Nordea have been measured at
the consolidated book value immediately before the reclassification, instead of fair value. Until
reclassification, Nordea was accounted in accordance with IAS 28 Investments in associates and
joint ventures.
In the consolidated balance sheet, the shares are presented under non-current assets held for
sale in the Holding segment.
Additional information on Nordea, while it was classified as an associate, is disclosed in note 13
Investments in associates and joint ventures.
Mandatum’s life insurance business in the Baltics
Mandatum Life signed on 15 June 2021 an agreement to sell their Baltic life insurance business
to Lithuanian Invalda INVL Group. Upon closing of the transaction, Mandatum Life’s all Baltic life
insurance operations will be transferred to Invalda INVL Group. The transaction is expected to
be completed during the first half of the year 2022. The transaction is subject to approval by the
Financial Supervisory Authorities.
The underwriting portfolio included in the agreement consists primarily of contracts in Life’s
unit-linked products segment. The effect of the with profit portfolio on Life’s Other products
and services segment’s investment and expense result is minor. Premium income of the
underwriting portfolio was EUR 25 million in 2021 and claims expenses EUR 16 million.
35 Events after the balance sheet date
Dividend proposal to the AGM
In the meeting of 9 Feb 2022, the Board of Directors decided to propose at the Annual General
Meeting on 18 May 2022 a divided distribution of EUR 4.10 per share (totalling approx. EUR
2,273 million based on the number of outstanding shares at the balance sheet date). The
dividends to be paid will be accounted for in the equity in 2022 as a deduction of retained
earnings.
Acquisition of own shares
Sampo’s share buyback programme launched on 4 October 2021 continued after the end of
the reporting period. On 8 February 2022, Sampo plc held in total 12,219,968 Sampo A shares
representing 2.20 per cent of the total number of shares in Sampo plc.
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Sampo Group and Sampo plc
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.
Classification of 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 opera-
tional 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.
36 Risk Management Disclosure
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. Should the company’s
understanding of changes or its 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, man-
aging 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 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 a 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.
Sustainability as a business risk driver
The issues related to sustainability are changing the
preferences and values of Sampo Group companies’
stakeholders and, as a result, the operating and competi-
tive environment. For example, investors and authorities
are putting an increasing focus on sustainability, but
consumers and employees are also emphasising these
topics when choosing a brand or an employer.
The Group companies operate mainly in countries, which
are characterised by an inherent respect for human
rights, high transparency, and low levels of corruption
and bribery. In addition, the compliance requirements for
labour rights, health and environmental legislation and
freedom of speech and association. These themes are also
inherent in the operations of all Sampo Group companies.
The key sustainability-related risk drivers for Sampo
Group can be divided into five main categories:
Sustainable business management and practices are
fundamental to Sampo Group companies’ operations.
Good governance in Sampo Group means effective poli-
cies, management practices, and training, which provide
assurance that the Group companies and their personnel,
suppliers and other business partners comply with laws,
regulations and generally accepted principles on human
rights, labour rights, the environment and climate,
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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.
Sustainable corporate culture includes factors relating to
the work environment, diversity and inclusion, employee
health and well-being, competence development, remu-
neration, and talent attraction and retention. The Sampo
Group companies want to provide customers with the
best service in all situations. Here, skilled, and motivated
employees are an essential success factor. Losing talent or
being perceived as an unattractive employer would pose
large risks for the businesses. Therefore, the 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 inclusion are key focus areas for the Sampo
Group companies, which are committed to providing
a 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 and governance struc-
tures, conducting organisational development programs,
and offering employees training, interesting career
opportunities and attractive remuneration packages.
Sustainable investment management and operations are
important in managing investment risks and in mitigat-
ing potential adverse impacts on the Group’s reputation.
Therefore, the Sampo Group companies take environ-
mental (including climate change), social and governance
(“ESG”) issues into account when assessing the security,
quality, liquidity, and profitability of investments.
Investment opportunities are carefully analysed 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, the Group companies use different ESG strategies
to ensure the effective consideration and management of
investment risks arising from ESG issues. The strategies
used include, for example, ESG integration, sector-based
screening, norms-based screening, and active ownership.
Sustainable product and service offering is important
in meeting the evolving needs of all customers and in
mitigating potential adverse impacts on the Group’s
reputation. Therefore, the Sampo Group companies aim
to take ESG issues, including climate change, into account
in product and service development, insurance under-
writing, and supply chain management. Additionally,
sustainable product and service offering requires 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. The focus in sales and marketing
practices is on meeting the demands and needs of the
customer and providing the customer with the informa-
tion necessary for them to make well-informed decisions
on their insurance coverage. The Sampo Group compa-
nies manage risks related to these themes, for example,
by having effective internal policies and governance
structures, and offering employees training.
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 cate-
gorised 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, 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 Agree-
ment, limiting the temperature rise to 1.5°C, would have
moderate consequences, whereas 3–5°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.
Physical risks are risk factors affecting especially the
financial position and results of the Group’s non-life
insurers. The increasing likelihood of extreme weather
conditions and natural disasters is included in internal
risk models. Climate-related risks are also managed effec-
tively with reinsurance programs and price assessments.
Since climate change could increase the frequency and/
or severity of physical risks, the Sampo Group companies
conduct sensitivity analyses using scenarios in which the
severity of natural catastrophes is assumed to increase.
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The Sampo Group companies also help their corporate
and private customers to manage climate-related risks.
Extreme weather events can, for example, damage
properties, lead to crop failure and business interruption.
Loss prevention is an essential part of insurance services,
as it helps customers to reduce economic losses and
mitigates the impacts of climate change.
The Sampo Group companies’ investments can be
exposed to both physical risks and transition risks,
depending on the investment in question. Investments
are particularly exposed to physical risks in the form
of losses incurred from extreme weather events. The
transition to a low-carbon society with potentially
increasing environmental and climate regulation, more
stringent emission requirements, and changes in market
preferences, could in turn cause transition risks for the
Group’s investments and possible revaluation of assets
as operating models in carbon intense sectors change. To
manage physical risks and transition risks, investment
opportunities are carefully analysed before any invest-
ments are made and climate-related risks are considered
along with other factors affecting the risk-return ratio
of individual investments. The methods used by Sampo
Group companies include, for example, annual analysis of
the carbon footprint and climate impact of investments,
sector-based screening and ESG integration, monitoring
the geographical distribution of investments, and
engagement with investee companies.
Further information on corporate responsibility in Sampo
Group is available in the Corporate Responsibility
Report 2021 published in May 2022 www.sampo.com/
year2021.
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 materialised 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
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 ESG-issues
and with key stakeholders (i.e. customers, personnel,
investors, co-operation partners, authorities) and how
Sampo Group has organised its corporate governance
system.
Risks inherent in business operations
In its underwriting and investment operations, Sampo
Group is consciously taking certain risks to generate
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
authorisations 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 must be
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KAAVIO N.O 3
Classification of risks in Sampo Group
External drivers
Negative impact on financial results, capitalisation 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
ALM risks
Earnings risks /
capital charge
Earnings risks /
no capital charge
Consequential risks /
capital charge
Consequential risks /
no capital charge
Concentration risk Concentration risk Concentration risk Concentration risk Concentration risk Concentration risk
noted that the categorisation 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. To manage these risks efficiently, Sampo
Group companies must have a detailed understanding of
expected cash flows and their variance within each of the
company’s activities. In addition, a thorough understand-
ing 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
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growth rates are central ALM risks in Sampo Group. The
ALM risks are one of the focus areas of senior manage-
ment 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 materialise 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.
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 analysed.
• 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 optimised,
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
capitalisation, leverage, and liquidity. It is also essential to
identify potential risk concentrations and to have a thor-
ough understanding of how solvency and reported profits
of companies would develop under different scenarios.
These concentrations and correlations may have an effect
on the Group level capitalisation and liquidity buffers as
well as on the Group level management actions.
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FINANCIAL STATEMENTS 2021
When the above-mentioned core activities are success-
fully implemented, a balance between profits, risks and
capitalisation can be achieved both at company and the
Group level and shareholder value can be created.
Sampo Group risk profile
Sampo’s strategy is to create long-term value from its
non-life insurance operations. The Group’s focus within
non-life insurance is on the private and SME business in
the Nordic countries and the digital distribution market
in the United Kingdom. Sampo Group is first and fore-
most exposed to the 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, geo-
graphically the Nordics as a large area is more a source of
underwriting diversification than concentration. Hence,
inherently the Nordic area is a good basis for diversified
business. Geographic diversification was extended into
the United Kingdom in 2020, when Sampo acquired a
majority stake in Hastings, and which was strengthened
in late 2021 when Sampo became its sole owner.
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 operational processes and
agreements with counterparties is preventing accumula-
tion of counterparty default risks and operational risks.
Hence, these risks are mainly managed at company level.
The number 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 directly affect 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 all operate within the Nordic
countries, but mostly in different geographical areas
and in different lines of business and hence their under-
writing risks are different by nature. There are, however,
some common risk factors such as the life expectancy
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 appe-
tite of If, Topdanmark, Hastings and Mandatum 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 2021 was EUR 28,672 million (27,531)
as presented in the following graph. Mandatum’s and
Topdanmark’s investment assets presented here do not
include assets which cover unit-linked contracts.
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FINANCIAL STATEMENTS 2021
Graph 21
The content of the figures in this graph is dierent compared to financial asset line presented in the balance sheet. The total investment allocation of Mandatum Life is equal to EUR 5,233 million. When EUR
14 million of intra-group assets, EUR 22 million of accrued interest, EUR 586 million of cash, EUR 179 million of real estates and around EUR 10 million of assets belonging to non-current assets held for sale
are deducted and EUR 4 million of derivatives are added, the total is equal to 4,427 which corresponds to the sum of Mandatum’s financial assets on Sampo Group’s balance sheet.
If figures include cash EUR 521 million.
Topdanmark figures do not include cash EUR 153 million but they do include real estate EUR 394 million and investments in associated companies EUR 313 million.
Sampo Plc figures do not include intragroup items, accrued interest and derivatives amounting to EUR 104 million as well as operational bank accounts amounting to EUR 80 million, which are not used for
investment operations. Sampo plc's figures do not include debt instruments issued by the insurance subsidiaries.
*Private Equity also includes direct holdings in non-listed equities.
Development of investments
If, Mandatum Life, Hastings, Sampo plc and Topdanmark
EURm
31 December 2021
Total EUR 28,672 million
31 December 2020
Total EUR 27,531 million
If IfMandatum Life Mandatum LifeSampo plc Sampo plcHastings HastingsTopdanmark Topdanmark
7,687
2,084
976
5,533
11,251
● Fixed income 86% 62% 97% 81% 77% 88% 63% 97% 63% 82%
● Listed equity 14% 24% 0% 10% 8% 12% 24% 0% 23% 6%
● Private equity* 0% 6% 0% 9% 5% 0% 5% 0% 14% 4%
● Real estate 0% 4% 0% 0% 6% 0% 3% 0% 0% 7%
● Other alternative investments 0% 5% 3% 0% 3% 0% 5% 3% 0% 2%
6,199
4,505
1,125
5,233
11,610
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FINANCIAL STATEMENTS 2021
Investment activities and market risk taking are arranged
pro-actively in such a way that there is no significant over-
lap between the wholly owned subsidiaries’ single name
risks except with regards to Nordic banks where compa-
nies have their extra funds in short-term money market
assets and cash. From the diversification of the assets of
the balance sheet 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. 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. Most 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.
In the next paragraphs concentrations by homogenous
risk groups and by single names are presented first and
there after balance sheet level risks are discussed.
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. Sampo
considers that the balance sheet values describe the
maximum exposure amount exposed to credit risk.
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Exposures by sector, asset class and rating
Sampo Group, 31 December 2021
EURm AAA
AA+
-
AA-
A+
-
A-
BBB+
-
BBB-
BB+
-
C D Non-rated
Fixed
income
total
Listed
equities Other
Counter-
party risk 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 2020 - - - - -
In the table, both fixed income instruments and listed equities include direct and indirect investments.
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Most of the financial institutions and covered bonds are in
the Nordic countries, with Hastings bringing along some
diversification into the investments from this perspective.
Fixed income investments in the financial sector
Sampo Group, 31 December 2021
EURm Coveredbonds
Cashandmoney
marketsecurities
Long-term
seniordebt
Long-term
subordinateddebt Total
Denmark
Finland
Sweden
France
Norway
United States
Ireland
United Kingdom
Canada
Netherlands
Other
Iceland
Germany
Spain
Gibraltar
Australia
Switzerland
Bermuda
New Zealand
Austria
Belgium
Estonia
Guernsey
Luxembourg —
Italy —
Cayman Islands —
Total
This can be seen in the tables Fixed income investments
in the financial sector, Sampo Group, 31 December 2021
and 31 December 2020.
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Fixed income investments in the financial sector
Sampo Group, 31 December 2020
EURm Coveredbonds
Cashandmoney
marketsecurities
Long-term
seniordebt
Long-term
subordinateddebt Total
Denmark
Sweden
Finland
Norway
France
Ireland
United States
United Kingdom
Netherlands
Canada
Iceland
Germany
Switzerland
Australia
New Zealand
Spain
Gibraltar
Estonia
Bermuda
Austria
Luxembourg
Belgium
Guernsey
Italy —
Cayman Islands —
Jersey —
Total
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FINANCIAL STATEMENTS 2021
Fixed income investments in the public sector
Sampo Group, 31 December 2021
EURm Governments
Governments
guaranteed
Public sector,
other Total
Sweden
Norway
Finland
Supranationals
Germany
France
Greece
Total
Sampo Group, 31 December 2020
EURm Governments
Governments
guaranteed
Public sector,
other Total
Sweden
Norway
Finland
Germany
Supranationals
France
United Kingdom
Total
The public-sector exposure includes government bonds,
government guaranteed bonds and other public-sector
investments as shown in the tables Fixed income invest-
ments in the public sector, Sampo Group, 31 December
2021 and 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.
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FINANCIAL STATEMENTS 2021
The listed equity investments of Sampo Group totalled
EUR 3,812 million at the end of year 2021 (3,560). The
geographical core of Sampo Group’s equity investments
is in the Nordic companies. The proportion of Nordic
companies’ equities corresponds to 56 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 graphs Breakdown of listed equity investments by
geographical regions, Sampo Group, 31 December 2021
and 31 December 2020.
Graph 22
Breakdown of listed equity investments by geographical regions
Sampo Group
●
Denmark 456
●
Norway 122
●
Sweden 913
●
Finland 655
●
Western Europe 783
● Eastern Europe 26
● North America 437
● Latin America 27
● Asia 392
● Denmark 389
● Norway 184
● Sweden 693
● Finland 629
● Western Europe 700
● Eastern Europe 21
● North America 501
● Latin America 40
● Asia 403
31 December 2021
Total EUR 3,812 million
31 December 2020
Total EUR 3,560 million
19%
1%
1%
11%11%
14%
5%
20%
18%
24%
1%
1%
12%
10%
11%
3%
21%
17%
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FINANCIAL STATEMENTS 2021
Largest holdings by single name
The largest exposures by individual issuers and counter-
parties are presented in the tables Largest exposures by
issuer and asset class, Sampo Group, 31 December 2021
and 31 December 2020.
Largest exposures by issuer and asset class
Sampo Group, 31 December 2021
Issuer,
EURm Total
oftotal
investment
assets
Cash&short-
termfixed
income
Long-term
fixedincome
total
Long-term
fixedincome
Government
guaranteed
Long-term
fixedincome
Coveredbonds
Long-term
fixedincome
Seniorbonds
Long-term
fixedincome
Tierand
Tier Equities
Uncolla-
teralisedpart
ofderivatives
Nordea Bank — —
Nykredit Realkredit — — — — —
BNP Paribas — — — —
Danske Bank —
Skandinaviska Enskilda
Banken — —
Realkredit Danmark
— — — — — —
DLR Kredit — — — — — —
Sweden — — — — — —
Nordea Kredit — — — — —
DNB Bank — — — —
Total top 10 exposures —
Other
Total investment assets
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FINANCIAL STATEMENTS 2021
Largest exposures by issuer and asset class
Sampo Group, 31 December 2020
Issuer,
EURm Total
oftotal
investment
assets
Cash&short-
termfixed
income
Long-term
fixedincome
total
Long-term
fixedincome
Government
guaranteed
Long-term
fixedincome
Coveredbonds
Long-term
fixedincome
Seniorbonds
Long-term
fixedincome
Tierand
Tier Equities
Uncolla-
teralizedpart
ofderivatives
Nykredit Realkredit — — — — —
Nordea Bank — —
Realkredit Danmark — — — — — —
Jyske Realkredit — — — — — —
Danske Bank —
DLR Kredit — — — — — —
BNP Paribas — — — —
Skandinaviska Enskilda Banken — —
Nordea Kredit — — — — — —
Sweden — — — — — —
Total top 10 exposures —
Other
Total investment assets
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FINANCIAL STATEMENTS 2021
The largest high-yield and non-rated fixed income
investment single-name exposures are presented in the
tables Ten largest direct high-yield and non-rated fixed
income investments, Sampo Group, 31 December 2021
and 31 December 2020. Furthermore, the largest direct
listed equity exposures are presented in the tables Ten
largest direct listed equity investments, Sampo Group,
31 December 2021 and 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, 31 December 2021
Ten largest direct high-yield and non-rated fixed income
investments Rating Total, EURm
% of total direct fixed
income investments
High Street Shopping NR
Nykredit Realkredit NR
TDC B
Trevian Finland Properties I NR
Danmarks Skibskredit NR
Realkredit Danmark NR
Sponda NR
GN Store Nord NR
Saab NR
Ellevio Holding NR
Total top 10 exposures
Other direct fixed income investments
Total direct fixed income investments
Ten largest direct listed equity investments Total, EURm
% of total direct
equity investments
Saxo Bank
*
)
Volvo
Volvo Car
ABB
Husqvarna
Nobia
Enento Group
Vaisala
Nederman Holding
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.
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FINANCIAL STATEMENTS 2021
Ten largest direct high-yield and non-rated fixed income investments and
direct listed equity investments
Sampo Group, 31 December 2020
Ten largest direct high-yield and non-rated fixed income
investments Rating Total, EURm
% of total direct fixed
income investments
High Street Shopping NR
Nykredit Realkredit NR
TDC B
Evergood 4 ApS B
Sponda NR
Trevian Finland Properties I NR
Danmarks Skibskredit NR
Realkredit Danmark NR
Saab NR
Ellevio Holding NR
Total top 10 exposures
Other direct fixed income investments
Total direct fixed income investments
Ten largest direct listed equity investments Total, EURm
% of total direct
equity investments
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.
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 espe-
cially 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 in case interest rates would
rise, because the economic value of insurance liabilities
would decrease more than the 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 as the Group’s holding company responsible
for the group’s capital management activities. These
actions are guided by targets set for Group level solvency
and debt leverage and they include decisions on Group
level investment exposures, business growth and
performance targets, reinsurance strategies, capital
distributions and capital instrument issuances. In
addition, Group level risk accumulations and concentra-
tions are monitored regularly and managed by adjusting
aggregated risks where necessary.
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FINANCIAL STATEMENTS 2021
The parent company Sampo plc is also a source of
liquidity within the Group. Hence, the healthy funding
structure and the capacity to generate funds if needed
are on continuous focus. Sampo plc needs liquidity to
manage the group’s financing needs, enable dividend
security and to finance potential transactions. Sampo plc
funding is limited to internal dividends and investment
returns but can periodically be complemented with new
debt and capital or asset sales. Hence, holding company
liquidity needs to be managed holistically together with
the dividend policy, strategic ambitions, and balance
sheet targets.
As at 31 December 2021 Sampo had long-term strategic
holdings of EUR 7,596 million in the subsidiary and
associated companies and they were funded mainly by
capital of EUR 8,823 million and senior debt of EUR 1,878
million and subordinated debt of EUR 1,487 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 139 million was 0.6
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 2021 and
31 December 2020.
Balance sheet structure
Sampo plc, 31 December 2021 and 31 December 2020
EURm Dec Dec
Assets total
Liquidity
Investment assets
Other investments
Fixed income
Equity & private equity
Subordinated loans
Equity holdings
Subsidiaries
Associated
Other assets
EURm Dec Dec
Liabilities total
CPs issued
Long-term senior debt
Private placements
Bonds issued
Subordinated debt
Capital
Undistributable capital
Distributable capital
Other liabilities
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 28 (34) per cent.
• Sampo’s net debt is negative at EUR -505 (2,405)
million and is low as such.
Regarding liquidity, the liquid funds of Sampo plc were
EUR 3,732 (1,170) 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 May and it will
significantly lower the liquidity position of Sampo. A part
of the investment assets (836) can be sold in case liquidity
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FINANCIAL STATEMENTS 2021
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 to 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 2021 and 31 December 2020 are
all issued by Mandatum and eliminated from Group’s own
funds. Should these assets be sold, in addition to liquidity
in Sampo plc, own funds and Sampo Group solvency ratio
would increase.
Sampo plc can 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.
The maturities of financial assets and liabilities and lease
liabilities are presented in the tables Cash flows according
to contractual maturity, Sampo plc, 31 December 2021 and
31 December 2020.
Cash flows according to contractual maturity
Sampo plc, 31 December 2021
Carrying amount total Cash flows
EURm
Carrying
amounttotal
Carrying
amountwithout
contractual
maturity
Carrying
amountwith
contractual
maturity
–
–
Financial assets
Financial assets (non-derivatives)
Interest rate swaps — — — —
FX forwards — — — — — — — — —
Financial liabilities — - - - - - - —
Financial liabilities (non-derivatives) — - - - - - - —
Interest rate swaps — — —
FX derivatives — — — — — — — — — —
Lease liabilities — - - — — — — —
Net technical provisions — — — — — — — — — —
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FINANCIAL STATEMENTS 2021
Cash flows according to contractual maturity
Sampo plc, 31 December 2020
Carrying amount total Cash flows
EURm
Carrying
amounttotal
Carrying
amountwithout
contractual
maturity
Carrying
amountwith
contractual
maturity 2021 2022 2023 2024 2025
2026–
2035 2036–
Financial assets
Financial assets (non-derivatives)
Interest rate swaps — — —
FX forwards — — — — — — —
Financial liabilities — - - - - - - —
Financial liabilities (non-derivatives) — - - - - - - —
Interest rate swaps — — —
FX derivatives — — — — — — — — — —
Lease liabilities — - - - — — — —
Net technical provisions — — — — — — — — — —
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FINANCIAL STATEMENTS 2021
Sampo Group capitalisation
Capitalisation at the Group level
Sampo’s core business competences are skilful pricing of
risks inherent in business operations and high-quality
management of arising risk-exposures and capital needed
to cover these risks. A balance between earnings, risks
and capital contributes positively to return on equity and
to stakeholder confidence, facilitating the creation of
shareholder value.
Sampo plc is responsible for the group’s capital manage-
ment activities. These actions are guided by targets set for
Group level solvency and debt leverage and they include
decisions on Group level investment exposures, business
growth and performance targets, reinsurance strategies,
capital distributions and capital instrument issuances.
Group level capitalisation is managed within Sampo’s
capital management framework, which sets targets for
solvency and informs potential risk management actions.
Group level capitalisation and the factors affecting it are
illustrated in the graph Sampo Group’s capitalisation
framework.
KAAVIO N.O 18
Capital requirements
Group’s own funds
Sampo plc
Mandatum
If
Topdanmark
Other related undertakings
Group level buers:
• minimum level buer
• risk buer
• operating buer
Factors aecting the size of group
level buers:
• risk appetite
• profitability and its volatility
• risk exposures
• diversification benefits
• growth prospects
• shareholders’ dividend
expectations
• business risks & arrangements
• liquidity and issuance capacity
Other items
Consolidated
Group equity / Excess of
assets over liabilities
Sampo Group’s capitalisation framework
Hastings
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FINANCIAL STATEMENTS 2021
The Group’s capital requirement is dependent mainly on
the capital requirements of the sub-groups. The market
risk stemming from the holding in Nordea 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 relatively small, 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 require-
ment.
Diversification benefit exists at two levels, within the
companies and between the companies. The former is
included in the companies’ solvency capital requirement
(SCR).
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 cur-
rencies to the euro. When the reporting currencies of If,
Topdanmark and Hastings depreciate, the actual amount
of the Group’s capital in euros decreases and the capital
requirements of If, Topdanmark and Hastings will be
lower in euro terms. Translation currency risk is moni-
tored internally and its effect on Sampo Group’s solvency
on a going concern basis is analysed regularly. However,
internally no capital need is set for translation risk,
because it is realised only when a sub-group is divested.
The Group level buffers equal in total to the difference
between the amount of the Group’s own funds and the
Group capital requirement. In addition to sub-group level
factors – expected profits and their volatility, business
growth prospects, volatility of the balance sheet due
to fluctuations in the market value of investments and
insurance liabilities, and ability to issue Solvency II
compliant capital instruments – there are factors that
are additionally relevant when considering the size of
the Group level buffers. The most material of them are
correlation of sub-groups’ profits, parent company’s
capacity to generate liquidity, probability of business
arrangements and shareholders’ dividend expectations.
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FINANCIAL STATEMENTS 2021
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 2021, 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.
There are minor differences between the figures reported
by Sampo Group and If due to differences in foreign
exchange rates used in the consolidation.
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.
Graph 1, 2, 3
Breakdown of gross written premiums
If, 31 December 2021, total EUR 5,134 (4,823) million
● Private 2,937 (2,750)
● Commercial 1,292 (1,220)
● Industrial 736 (700)
● Baltic 169 (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 (2,059) include Solvency II Line of Business Motor vehicle liability insurance (555) and Other motor insurance (1,504).
•
IFRS Line of Business Accident (696) includes Solvency II Line of Businesses Income protection insurance (355), Other Life (54), Medical expense insurance (287) and Assistance (0).
By business area By country By line of business
● Norway 1,633 (1,453)
● Sweden 1,826 (1,727)
● Finland 1,003 (999)
● Denmark 490 (492)
● Baltic 169 (152)
● United Kingdom 12 (0)
● Motor other and motor
third party liability 2,059
(1,941)
● Workers'
compensation 181 (194)
● Liability 332 (308)
● Accident 696 (647)
● Property 1,741 (1,606)
● Marine, aviation,
transport 125 (128)
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FINANCIAL STATEMENTS 2021
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 2021 and 31 December 2020.
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 under-
writing 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 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 2021, retention levels were between SEK
100 million (approximately EUR 9.8 million) and SEK 250
million (approximately EUR 24.4 million) per risk and
SEK 250 million (approximately EUR 24.4 million) per
event.
Sensitivity test of underwriting result
If, 31 December 2021 and 31 December 2020
Effectonpre-taxprofit
(EURm)
Key Figures
Current
level() Changeincurrentlevel
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 - -
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FINANCIAL STATEMENTS 2021
Reserve risk and its management and control
The main reserve risks for If are stemming from uncer-
tainty in the claim amounts caused by higher-than-ex-
pected claims inflation, increased retirement age and
increased life expectancy.
Reserves, especially in long tailed business, are sensitive
to assumptions of future claims inflation since they
affect the future claim amount. An increased retirement
age, through for instance a political decision, will
increase the duration and present value of annuities as
these decreases, or expire, at retirement. An increase
in life expectancy will likewise increase the duration
and present value of annuities. The present value of
discounted reserves is sensitive to decreasing interest
rates, especially in Sweden and Finland, due to the longer
duration of the liabilities.
In the tables Technical provisions by line of business
and major geographical area, If, 31 December 2021 and
31 December 2020, the size and duration of If’s technical
provisions are presented by line of business and major
geographical area. Finland’s share of technical provisions
is larger than its share of gross written premiums, which
is mainly due to the long duration of the motor business
and Workers’ compensation (“WC”). The long duration
is mainly explained by the presence of annuities in these
lines of business. The duration of the provisions, and thus
the sensitivity to changes in discount rates, varies with
each product portfolio. The weighted average duration
for 2021 across the product portfolios was 7.0 years. The
proportion of technical provisions related to Motor other,
MTPL and WC was 60 per cent.
Technical provisions by line of business and major geographical area
If, 31 December 2021 and 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
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
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FINANCIAL STATEMENTS 2021
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 2021.
The technical provisions are further analysed 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 22.
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 calcu-
lated 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’s 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 in If continuously monitor the level of
provisions to ensure that they comply with the estab-
lished guidelines. The actuaries also develop methods
and systems to support these processes. Factors that
are considered in the actuarial estimates include loss
development trends, the level of unpaid claims, changes
in legislation, case law and economic conditions.
Sensitivities of technical provisions
If, 31 December 2021 and 31 December 2020
Technicalprovision
item Riskfactor
Changein
riskparameter Country
EffectEURm
EffectEURm
Nominal provisions Inflationincrease
Increaseby
percentagepoint
Sweden
Denmark
Norway
Finland
Annuities and estimated
share of claims
provisions to future
annuities
Decreasein
mortality
Lifeexpectancy
increasebyyear
Sweden
Denmark
Finland
Discounted provisions
(annuities and part of
Finnish IBNR)
Decreasein
discountrate
Decreaseby
percentagepoint
Sweden
Denmark
Finland
Market risks
The total market value of If’s investment portfolio at 31
December 2021 was EUR 11,610 million (11,251). A large
part of the fixed income portfolio was concentrated to
financials, corporate bonds issued by financial institu-
tions and bank account balances amounted to 29.4 per
cent of the portfolio. If covered bonds are included, the
concentration to financial institutions was 47.5 per cent.
The role of alternative investments such as real estate,
private equity and other alternative investments is
immaterial.
The composition of the investment portfolios by asset
classes in If at year end 2021 and at year end 2020 and
average maturities of fixed income investments are shown
in the table Investment allocation, If, 31 December 2021
and 31 December 2020. 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, the issuer and counterparty limits, the sensitivity
limits for interest rates and credit spreads as well as the
regulatory capital requirements are regularly monitored.
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FINANCIAL STATEMENTS 2021
Investment allocation
If, 31 December 2021 and 31 December 2020
December December
Asset class
Market value,
EURm Weight, %
Average maturity,
years
Market value,
EURm Weight, %
Average maturity,
years
Fixed income total
Money market securities and cash
Government bonds
Credit bonds, funds and loans
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 - -
Real estate - -
Private equity - -
Biometric - -
Commodities - -
Other alternative - -
Trading derivatives - - -
Asset classes total - -
FX Exposure, gross position - - - -
Line fixed income total includes cash and bank EUR 521 million and line alternative investments total includes real estate EUR 1 million in comparison to note 14 financial assets.
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FINANCIAL STATEMENTS 2021
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 or by using currency derivatives.
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.
Over the years If has 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 1.1 years on 31 December 2021 (1.4). The
respective duration of insurance liabilities was 7.0 years
(6.5). 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 perspec-
tive, 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, 31 December 2021 and 31 December
2020 in the section Underwriting risks.
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
tables Transaction risk position, If, 31 December 2021 and
31 December 2020. The tables show 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 2021
Base currency, SEKm EUR USD JPY GBP SEK NOK CHF DKK Other Total, net
Insurance operations - - - - - - - - -
Investments
Derivatives - - -
Transaction risk, net position - - - - - - - -
Sensitivity: SEK -10% - - - - -
If, 31 December 2020
Base currency, SEKm EUR USD JPY GBP SEK NOK CHF DKK Other Total, net
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.
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FINANCIAL STATEMENTS 2021
Liquidity risk
If’s liquidity risk is limited since premiums are collected
in advance, premium inflows occur continuously
throughout the year, and large claim 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.
Cash flows according to contractual maturity
If, 31 December 2021
Cash flows
EURm
Carrying amount
total
Carrying
amount without
contractual
maturity
Carrying amount
with contractual
maturity – –
Financial assets —
Financial assets
(non-derivatives) —
Interest rate swaps — — — — —
FX derivatives — — — — — — —
Financial liabilities — —
Financial liabilities
(non-derivatives) — —
Interest rate swaps — — — — — — — — —
FX derivatives — — — — — — —
Lease liabilities — —
Net technical provisions —
The maturities of technical provisions and financial assets
and liabilities as well as lease liabilities are presented in
the tables Cash flows according to contractual maturity,
If, 31 December 2021 and 31 December 2020. The average
maturity of fixed income investments was 2.3 years (2.7).
The table shows the financing requirements resulting
from expected cash inflows and outflows arising from
financial assets and liabilities as well as of lease liabilities
and technical provisions.
In 2021, financial markets had a fairly limited number
of attractive long-term investment opportunities from
If’s perspective. Therefore, investments were made in
instruments that had short maturities or the amount of
cash held increased, which meant that If’s liquidity risk
was on a very low level in 2021.
If has a relatively low amount of financial liabilities and
thus the refinancing risk is small.
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FINANCIAL STATEMENTS 2021
Cash flows according to contractual maturity
If, 31 December 2020
Cash flows
EURm
Carrying amount
total
Carrying
amount without
contractual
maturity
Carrying amount
with contractual
maturity – –
Financial assets —
Financial assets
(non-derivatives) —
Interest rate swaps — — — — — — — — — —
FX derivatives — — — — — — —
Financial liabilities — — — —
Financial liabilities
(non-derivatives) — — — — —
Interest rate swaps — — — — —
FX derivatives — — — — — — —
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.
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.
Reinsurance counterparty risk
Reinsurance is used regularly to utilise If’s own funds
efficiently and reduce the cost of capital, limit large fluc-
tuations of underwriting results and have access to the
reinsurers’ competence base. The Reinsurance Committee
is a collaboration forum to secure appropriate reinsurance
cover is obtained for the insurance risk in accordance
with If’s risk appetite and shall give its opinion on and
propose actions in respect of such issues. The Committee
shall consider and propose changes to the reinsurance.
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 materialised) as
well as deviations from the Reinsurance Policy, shall be
reported.
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FINANCIAL STATEMENTS 2021
The distribution of reinsurance receivables and reinsur-
ers’ portion of outstanding claims on 31 December 2021
per rating category is presented in the table Reinsurance
recoverables, If, 31 December 2021 and 31 December 2020.
In the table EUR 180 million (155) of reinsurance recover-
ables are excluded, which mainly relates to captives and
statutory pooled solutions.
Because the recoverables reported above are typically
not covered by collaterals the whole amount is exposed
to counterparty risk. If’s Reinsurance Policy sets requi-
rements for the reinsurers’ minimum credit ratings and
the maximum exposure to individual reinsurers. Also, the
own credit -analysis plays a central role when counterpar-
ties 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.
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
materialised) 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 188 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 79.1 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
Reinsurance recoverables
If, 31 December 2021 and 31 December 2020
Dec Dec
Rating Total EURm % of total Total EURm % of total
AAA
AA+ - A-
BBB+ - BBB-
BB+ - C
D
Non-rated
Total
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 coun-
ter-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.
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FINANCIAL STATEMENTS 2021
Topdanmark Group
Underwriting risks
Non-life underwriting risks
As shown in the graph Breakdown of gross written
premiums by business area, country and line of business,
Topdanmark non-Life, 2021, Topdanmark’s insurance
portfolio is diversified across business areas and lines of
business.
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 programme 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 30 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. The NBCR (nuclear, biological,
chemical, radiological) acts of terrorism are covered by a
public organisation. 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.
Breakdown of gross written premiums
Topdanmark Non-Life, 2021, total EUR 1,383 (1,315) million
● Norway 0 (0)
● Sweden 0 (0)
● Finland 0 (0)
● Denmark 1,383 (1,315)
● Baltic 0 (0)
● United Kingdom 0 (0)
By business area By country By line of business
● Motor other and motor
third party liability 320
(306)
●
Workers' compensation
111 (98)
● Liability 83 (77)
● Accident 277 (264)
● Property 583 (564)
● Marine, aviation,
transport 8 (8)
● Private 719 (698)
● Commercial 664 (617)
● Industrial 0 (0)
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FINANCIAL STATEMENTS 2021
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
achieve more detailed data, which in turn enables the
company to continuously improve the pricing and gain
even better insight into how the different types of claims
are composed.
The non-life risk scenarios are presented in the table Non-
life insurance risk scenarios, Topdanmark, 31 December
2021 and 31 December 2020.
Non-life insurance risk scenarios
Topdanmark, 31 December 2021 and 31 December 2020
EURm after tax
Key Figures
Current level
(2021) Change in current level 2021 2020
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 - -
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
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
outstanding claims is presented in the following table.
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FINANCIAL STATEMENTS 2021
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 lines’ claims provisions.
Composition of non-life provisions for outstanding claims
Topdanmark, 31 December 2021 and 31 December 2020
Provisions for outstanding claims % Duration % Duration
Short-tall
Annuity provisions in workers’ compensation
Other claims provisions in workers’ compensation
Accident
Motor personal liability
Commercial liability
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.
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FINANCIAL STATEMENTS 2021
Life underwriting performance and risks
The split of premiums between products during the
last two years is presented in the table Sources of gross
Sources of gross premiums
Topdanmark life Insurance, 31 December 2021 and 31 December 2020
EURm
With profit schemes
Unit-linked schemes
Group life
Regular premiums
With profit schemes
Unit-linked schemes
Single premiums
Gross premiums
premiums, Topdanmark life Insurance, 31 December 2021
and 31 December 2020.
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 all 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.
The main risks of Topdanmark Livsforsikring can be
summarised 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.
Life insurance underwriting risk control
The loss-absorbing buffers are a crucial part of the with
profit concept in levelling 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 necessary,
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.
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FINANCIAL STATEMENTS 2021
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 individ-
ual 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 con-
tribution groups, there are separate loss absorbing buffers
and hence in each contribution group, the separate invest-
ment 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.
Pandemic
Extraordinary expenses as a result of a pandemic affecting
age groups insured in the company’s group life portfolio
are financed by equity.
Risk reduction
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
contribute to risk mitigation for similar claims in
the future.
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FINANCIAL STATEMENTS 2021
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
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
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 (collateralised loan obligations) to improve the
average investment return.
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.
To reach the general goals, the investment policy sets
the company’s objectives, strategies, organisation, 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 invest-
ment 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
implemented the organisation, 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.
Risk scenarios in life insurance
Topdanmark, 31 December 2021 and 31 December 2020
EURm after tax
Disability intensity - 35% increase
*
)
- -
Mortality intensity - 20% decline - -
*
)
35% increase first year, subsequently 25%, coincident with 20% decline in reactivation rates.
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FINANCIAL STATEMENTS 2021
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 Investment allocations excluding unit-linked,
Topdanmark, 31 December 2021 and 31 December 2020
without assets covering unit-linked liabilities.
The equity portfolios are well diversified and without
major single positions, when associated companies are
disregarded.
Investment allocations excluding unit-linked
Topdanmark, 31 December 2021 and 31 December 2020
TopdanmarkNon-life TopdanmarkLife
Dec Dec Dec Dec
Asset class
Market value,
EURm Weight, %
Market value,
EURm Weight,%
Market value,
EURm Weight, %
Market value,
EURm Weight, %
Fixed income total
Money market securities and cash
Government and mortgage bonds
Credit bonds
Index-linked bonds
CLOs
Listed equity total
Denmark
Scandinavia
Global
Alternative investments total
Real estate
Unlisted equities and hedge funds
Trading derivatives 3 0 9 0 14 0 180 3
Asset classes total 2,095 100 2,306 100 4,104 100 5,569 100
The exposure in equities outside Denmark and credit bonds has been adjusted by the use of derivatives. The figures do not include cash EUR 153 million but they do include real estate EUR 394 million and
investments in associated companies EUR 313 million. Unlisted equities and hedge funds include also private equity and direct holdings in non-listed equities.
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FINANCIAL STATEMENTS 2021
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 (collateralised 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.
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 unrealised 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.
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.
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 property portfolio mainly comprises owner-occupied
property. 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.
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 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 geographi-
cally and by issuer type and, therefore, the exposure to
concentration risk is insignificant.
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FINANCIAL STATEMENTS 2021
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.
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.
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.
Expected cash flows for provisions and the bond portfolio
Topdanmark, 31 December 2021 and 31 December 2020
Cash flow years
EURm
Carrying
amount - – – –
Provisions for claims
2020
2021
Life insurance provisions guarantees
and profit-sharing
2020
2021
Bond portfolio including
interest rate derivatives
2020
2021
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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FINANCIAL STATEMENTS 2021
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 minimise the risk to a single
debtor, Topdanmark strives to always have a well-diver-
sified portfolio of bonds not only regarding 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 counterparty’s credit
rating and the terms of the contract.
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
counterparty risk is assessed by the SCR standard
formula.
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FINANCIAL STATEMENTS 2021
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
Pricing risk
Advantage’s risk appetite require management to
maintain rates that are projected to achieve loss ratios
within the target loss ratio range. As a response to market
conditions rates were regularly adjusted, after review by
management, to remain competitive and provide custom-
er-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 because of the FCA’s General Insurance
Practices changes, any future COVID-19 developments,
inflation uncertainty, the embedding of Whiplash reforms
and other influences on pricing.
Weekly governance arrangements approve changes to
rate plan and review account performance. The Rating
Analysis Committee (“RAC”) approves decisions for
Gross technical provisions by line of business
Hastings, 31 December 2021 and 31 December 2020
Dec Dec
EURm Duration EURm Duration
Motor vehicle liability insurance
Other motor insurance
Fire and other damage to property insurance
Total
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
act on errors made by the outsourced service provider.
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FINANCIAL STATEMENTS 2021
Reserve risk
Advantage does not take significant reserve risk and holds
an internal risk margin to a 75 per cent 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, appropri-
ateness of techniques utilised, 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.
Hastings’ gross written premiums (GWP) for 2021
amounted to EUR 1,127 million.
Advantage maintained a disciplined approach to pricing
despite continued market competition. Policies grew year
on year. This disciplined but agile underwriting and pricing
approach led to over 350 selective rate adjustments within
footprint during 2021. Renewal pricing remains a significant
focus for management, and a change programme during
2021 ensured the FCA’s General Insurance Pricing Practices
regulatory requirements for renewal pricing were met and
Hastings’ customers continued to be treated fairly.
The global pandemic has continued to influence the risk
profile for 2021. A combination of effective pricing, claims
management and frequency experience has resulted in
profits and capital solvency with the solvency ratio being
towards the top of Advantage’s target range throughout
the period.
Sensitivities of technical provisions
Hastings, 31 December 2021 and 31 December 2020
Technicalprovisionitem Riskfactor Changeinriskparameter
EffectEURm
EffectEURm
Nominal provisions Inflation increase Increase by 1 percentage point
Periodic Payment Orders (PPOs) Decrease in mortality Life expectancy increase by 1 year
Discounted provisions Decrease in discount rate Decrease by 1 percentage point
Graph 24, 2, 3
Breakdown of gross written premiums
Hastings, 31 December 2021, total EUR 1,127 (103) million
● Private 1,127 (103)
● Commercial 0 (0)
● Industrial 0 (0)
By business area By country By line of business
● Norway 0 (0)
● Sweden 0 (0)
● Finland 0 (0)
● Denmark 0 (0)
● Baltic 0 (0)
● United Kingdom
1,127 (103)
● Motor other and motor
third party liability
1,112 (101)
●
Workers' compensation
0 (0)
● Liability 0 (0)
● Accident 0 (0)
● Property 16 (2)
● Marine, aviation,
transport 0 (0)
The comparative figures are for 6 weeks.
The comparative figures are for 6 weeks.
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FINANCIAL STATEMENTS 2021
Market risks
Investment performance in 2021 was closed 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 risk appetite includes a low appetite for
losses arising from volatility of market prices affecting
values of assets and liabilities and for assets not matching
the profile of liabilities. As a result, the investment
strategy includes a limited amount of equity exposure.
The core investment portfolio of debt securities, supple-
mented by a diversified portfolio of holdings in collective
investment schemes, is held by Advantage. The Advantage
Board works with the investment managers and invest-
ment consultants to maximise return whilst minimising
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 internally and
using an external consultancy. The monitoring outputs
are provided to the Investment Committee and Risk &
Compliance Committee quarterly.
Advantage made no direct use of derivatives during
the period. Derivatives are, however, utilised within
investment funds in which Advantage has a share, both for
hedging purposes and to generate additional return.
Investment allocation
Hastings, 31 December 2021 and 31 December 2020
Dec Dec
Asset class
Market
value,
EURm Weight, %
Average
maturity,
years
Market
value,
EURm Weight, %
Average
maturity,
years
Fixed income total
Money market securities and cash
Government bonds
Credit bonds, funds and loans
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
Real estate
Private equity
Biometric
Commodities
Other alternative
Trading derivatives
Asset classes total
FX Exposure, gross position 0 — 0,0 0 — 0.1
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FINANCIAL STATEMENTS 2021
Interest rate risk
Advantage manages balance sheet interest rate risk
principally through matched duration of assets and
liabilities meaning that interest rates are aligned, and
interest rate risk is reduced. This is monitored in the
quarterly Investment Committee meeting and includes
adherence to tight duration mismatch tolerances which
form part of the relevant risk appetite statement.
Cash flows according to contractual maturity
Hastings, 31 December 2021
Carrying amount
total
Carrying
amount without
contractual
maturity
Carrying amount
with contractual
maturity
Cash flows
EURm – –
Financial assets —
Financial assets
(non-derivatives)
—
Interest rate swaps — — — — — — — — — —
FX forwards — — — — — — — — — —
Financial liabilities — — —
Financial liabilities
(non-derivatives) — — —
Interest rate swaps — — — — — — — — — —
FX derivatives — — — — — — — — — —
Lease liabilities —
Net technical provisions —
Liquidity risks
Advantage maintains a short duration and highly
liquid portfolio. 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.
The liquidity profile and cash flow of investments is moni-
tored at the quarterly Investment Committee to ensure
Advantage can meet its liabilities into the future.
Advantage’s investment managers actively manage
liquidity risk in the portfolio to ensure that bonds can
be sold efficiently to meet cash needs. Informed by
market data, they look to purchase bonds with less than 5
years since issue date, larger issue sizes and which trade
regularly. Liquidity scoring is conducted by Advantage’s
investment managers, based on time since issue, issue
size, traded volumes and observed bid-ask spreads.
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FINANCIAL STATEMENTS 2021
Cash flows according to contractual maturity
Hastings, 31 December 2020
Carrying amount
total
Carrying
amount without
contractual
maturity
Carrying amount
with contractual
maturity
Cash flows
EURm – –
Financial assets — —
Financial assets
(non-derivatives) — —
Interest rate swaps — — — — — — — — — —
FX forwards — — — — — — — — — —
Financial liabilities — —
Financial liabilities
(non-derivatives) — —
Interest rate swaps — — — — — — — — — —
FX derivatives — — — — — — — — — —
Lease liabilities — —
Net technical provisions —
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FINANCIAL STATEMENTS 2021
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 programme includes both
Excess of Loss (“XoL”) and Quota Share (“QS”) protection.
Under the 2021 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
5.0 million per event loss.
To mitigate the inherent counterparty and credit risk
posed by the reinsurance programme to Advantage’s
balance sheet, Advantage has set criteria for the minimum
credit quality of the reinsurance counterparties and for
concentration limits.
Reinsurance recoverables
Hastings, 31 December 2021 and 31 December 2020
Dec Dec
Rating Total, EURm % of total Total, EURm % of total
AAA
AA
A
BBB
Less than BBB
Unrated
Total
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 collateralisation 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 reorganisation of reinsur-
ance groups to which Advantage is exposed.
Mandatum Group
Underwriting risks
The development of insurance liabilities during 2021 is
shown in the table Analysis of the change in provisions
before reinsurance, Mandatum Life, 31 December 2021.
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FINANCIAL STATEMENTS 2021
Analysis of the change in provisions before reinsurance
Mandatum Life, 31 December 2021
EURm
Liability
Premiums Claimspaid
Expense
charges
Guaranteed
interest Bonus 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 - -
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FINANCIAL STATEMENTS 2021
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 must
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 are
analysed 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 2021 technical provision by
EUR 71 million (78) including a EUR 58 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 2021 was EUR 11.3 million (11.6) after a EUR 7.3
million release from the longevity reserve.
The mortality risk result in life insurance was positive. A
possible pandemic is seen as the most significant risk that
could adversely affect the mortality risk result. However,
during the years 2020 and 2021 COVID-19 did not have
any significant effect on the mortality risk result. The
reason for this is that COVID-19 has had the most signif-
icant incremental effect on the mortality of elder people
and the insured are generally 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.
The table Claims ratios after reinsurance, Mandatum
Life, 31 December 2021, and 31 December 2020 shows
Claims ratios after reinsurance
Mandatum Life, 31 December 2021 and 31 December 2020
EURm Risk income Claims expense Claims ratio Risk income Claims expense Claims ratio
Life insurance 47.3 17.3 37% 47.4 24.2 44%
Mortality 43% 36%
Morbidity and disability 28% 52%
Pension 83.5 72.1 86% 87.8 74.7 95%
Individual pension 104% 95%
Group pension 83% 83%
Mortality (longevity) 83% 84%
Disability 54% 59%
Total 130.8 89.4 68% 135.2 99.0 73%
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FINANCIAL STATEMENTS 2021
the insurance risk result in Mandatum Life’s insurance
policies, excluding Baltic operations. The ratio of the
actual to expected claims costs was 68 per cent in 2021
(73). 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 12
million to EUR 24 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,
and 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 the insurance
liabilities and the technical provisions.
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 Risk Management Committee.
The Insurance Risk Committee 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
analysed 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 analysed, 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 behaviour and expense risks
From an Asset and Liability Management point of view,
surrender risk is not material because in Mandatum Life
around 85 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 around 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.
Policy terms and tariffs cannot usually be changed
materially during the lifetime of the insurance, which
increases the expense risk. The behaviour 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.
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FINANCIAL STATEMENTS 2021
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 behaviour 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 considered as part of
expense risk.
In Mandatum Life, the approach to market risk man-
agement is based on an analysis of technical provisions’
expected cash flows, interest rate level and current
solvency position, i.e., active Asset and Liability Man-
agement. A common feature for all with profit technical
provisions is the guaranteed rate and bonuses. The cash
flows of life technical provisions are generally 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.
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 15 per cent of total investments.
Investment allocations and average maturities of fixed
income investments as at year end 2021 and 2020 are
presented in the table Investment allocation, Mandatum
Life, 31 December 2021 and 31 December 2020.
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FINANCIAL STATEMENTS 2021
Investment allocation
Mandatum Life, 31 December 2021 and 31 December 2020
Dec Dec
Asset class
Market value,
EURm Weight, %
Average maturity,
years Market value, EURm Weight, %
Average maturity,
years
Fixed income total
Money market securities and cash
Government bonds — —
Credit bonds, funds and loans
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 - -
Real estate — -
Private equity
*
)
— -
Biometric — — —
Commodities — — — -
Other alternative — -
Trading derivatives — — — -
Asset classes total — -
FX Exposure, gross position — — — -
Notice that the total market value and allocation of investments in Mandatum Life dier from financial assets of Mandatum Group’s IFRS balance sheet. For example, in the investment allocation bonds are presented
with accrued interest (so called dirty value) and the investment allocation includes cash and equivalents managed by the investment organisation. In the investment allocation assets are categorised according to the
internal classification (for example fixed-income funds are included in fixed income instruments while in IFRS statements they are included in equity securities) which diers from the IFRS categorisation.
The total investment allocation of Mandatum Life is equal to EUR 5,233 million. When EUR 14 million of intra-group assets, EUR 22 million of accrued interest, EUR 586 million of cash, EUR 179 million of real estates
and around EUR 10 million of assets belonging to non-current assets held for sale are deducted and EUR 4 million of derivatives are added, the total is equal to EUR 4,427 million which corresponds to the sum of
Mandatum’s financial assets on Sampo Group’s balance sheet.
*
)
Private equity also includes direct holdings in non-listed equities.
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FINANCIAL STATEMENTS 2021
Balance sheet market risk
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.
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 Sampo Group’s risk
management principles. The general objective of these
control levels and respective guidelines is to maintain the
required solvency. When the above-mentioned control
levels are breached, the CRO reports to the Board which
then takes the responsibility for decisions regarding
capitalisation and market risks on 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 enough
return to cover the guaranteed interest rate plus bonuses
based on the principle of fairness as well as the share-
holder’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 capitalisation 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 grow-
ing part of Mandatum Life’s business, i.e., unit-linked
and risk insurance business, is not interest rate sensitive,
which mitigates the whole company’s interest rate risk.
The average duration of fixed income investments was 2.1
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
translation 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.
Mandatum Group’s transaction risk is equal to Mandatum
Life’s transaction risk. The transaction risk positions
of Mandatum Group against the euro as at year ends
2021 and 2020 are shown in the tables Transaction risk
position, Mandatum Group, 31 December 2021 and 31
December 2020. The tables show 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.
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FINANCIAL STATEMENTS 2021
Transaction risk position
Mandatum Group, 31 December 2021 and 31 December 2020
Base currency, EURm EUR USD JPY GBP SEK NOK CHF DKK Other Total, net
Technical provisions - -
Investments
Derivatives - - - - - - - -
Transaction risk, net position
Sensitivity: EUR -10%
Base currency, EURm EUR USD JPY GBP SEK NOK CHF DKK Other Total, net
Technical provisions - -
Investments
Derivatives - - - - - - - - -
Transaction risk, net position 0 -8 -2 2 4 1 3 -2 107 106
Sensitivity: EUR -10% -
Liquidity risks
Liquidity risk is relatively immaterial for Mandatum
Life in with-profit business because liability cash flows
in most lines of business are 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.
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 as well as lease liabilities are presented in
the tables Cash flows according to contractual maturity,
Mandatum Group, 31 December 2021 and 31 December
2020. The average maturity of fixed income investments
was 2.7 years in Mandatum Life. The tables show the
financing requirements resulting from expected cash
inflows and outflows arising from financial assets and
liabilities as well as technical provisions and lease
liabilities.
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FINANCIAL STATEMENTS 2021
Cash flows according to contractual maturity
Mandatum Group, 31 December 2021
Carrying
amount total
Carrying
amount without
contractual
maturity
Carrying amount
with contractual
maturity
Cash flows
EURm – –
Financial assets —
Financial assets
(non-derivatives) —
Interest rate swaps — — — — — — — — — —
FX forwards — —
Financial liabilities — - - - - - - -
Financial liabilities
(non-derivatives) — - - - - - - -
Interest rate swaps — — — — — — — — — —
FX derivatives — - — — — — — —
Lease liabilities — - - - - - - —
Net technical provisions — - - - - - - -
Carrying
amount total
Carrying
amount without
contractual
maturity
Carrying amount
with contractual
maturity
Cash flows
EURm 2021 2022 2023 2024 2025 2026–2035 2036–
Financial assets
Financial assets
(non-derivatives)
Interest rate swaps — — — — — — — — — —
FX forwards — — — — — — —
Financial liabilities — - - - - - - -
Financial liabilities
(non-derivatives) — - - - - - - -
Interest rate swaps — — — — — — — — —
FX derivatives — - — — — — — —
Lease liabilities — - - - - - -
Net technical provisions — - - - - - - -
In the tables, 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.
Mandatum Group’s cash flows dier slightly from Mandatum Life’s. In Mandatum Group’s financial assets cash flows, the internal loan given by Mandatum Life to its subsidiary is eliminated. However, the eect of
this is immaterial.
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FINANCIAL STATEMENTS 2021
Counterparty default risks
In Mandatum Life, the three main sources of counterparty
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
diversification of counterparties to prevent risk concen-
trations and by using collateral arrangements, e.g. ISDA
Master Agreements backed by Credit Support Annexes.
Mandatum Life settles interest rate swaps in central coun-
terparty clearing houses, which, while further mitigating
bilateral counterparty risk, also exposes to the systemic
risk related to central counterparty clearing houses.
Risks related to asset management
activities
Mandatum Group’s asset management company,
Mandatum Asset Management Ltd (MAM), is the asset
management arm of Sampo Group and an investment
firm which forms, together with its subsidiary Mandatum
AM AIFM, an investment firm group. MAM offers
discretionary and consultative asset management
for institutional and other professional investors and
manages a variety of investment products within its core
areas of credit, alternatives, and equity selection.
MAM’s risk management follows Sampo Group’s risk
management principles and Mandatum Holding’s risk
management policy. MAM’s risk management framework
is similar to Mandatum Group’s risk management
framework. MAM’s Board of Directors is responsible for
the adequacy of risk management and internal control
within the Company and the CEO has the overall respon-
sibility for the implementation of risk management in
accordance with the instructions set by the Board.
MAM’s most significant risk area are operational risks,
which is why operational risk management is an impor-
tant part of the Company’s risk management In addition
to operational risks, MAM is exposed to liquidity risk.
MAM’s business is financed by income financing, which
consists of commission income from clients and partners.
MAM has not financed its activities through external
financing, so the Company does not have any related risks
such as interest rate risk, exchange rate or refinancing
risk. Going forward, MAM’s liquidity strategy remains
to seek to finance the business without external loan
financing. MAM limits liquidity risk by monitoring its
liquidity position on a regular basis and by maintaining a
liquidity buffer. MAM also monitors its liquidity position
with respect to regulatory liquidity requirements.
MAM is also exposed to concentration risk with respect to
its clients as most of its business is linked to clients within
Sampo Group. Mandatum Life is MAM’s largest client by
commission income. This is not, however, considered as
a significant risk since Mandatum Life and MAM are both
Sampo Group companies.
MAM does not trade on its own account, and it is not
exposed to market risk arising from its own trading book.
MAM commission income is, however, strongly tied to the
value of the assets it manages and through its commission
income MAM is exposed to market risk. Nonetheless, the
asset portfolios MAM manages are well diversified both by
asset class as well as sector but also geographically.
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Sampo plc’s notes to the financial statementsGroup’s notes to the financial statements
182
FINANCIAL STATEMENTS 2021
SAMPO PLC’S FINANCIAL STATEMENTS
185
Sampo plc’s
balance sheet
184
Sampo plc’s
income
statement
186
Sampo plc’s
statement of
cash flows
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Group’s notes to the financial statements Sampo plc’s notes to the financial statements
Sampo plc’s Financial Statements
183
FINANCIAL STATEMENTS 2021
Sampo plc’s income statement
EURm Note
Sales 1
Sta expenses
Salaries and remunerations - -
Social security costs
Pension costs - -
Other - -
Other operating expenses 2 - -
Operating profit -
Financial income and expense 4
Income from shares in Group companies
Income from other shares
Other interest and financial income
Group companies
Other
Other investment income and expense
Other interest income
Interest and other financial expense - -
Exchange result -
Profit before appropriations and taxes
Group contribution
Income taxes -
Profit for the financial year
Sampo plc’s Financial Statements
Board of Directors’
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Auditor’s Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements Sampo plc’s notes to the financial statements
Sampo plc’s Financial Statements
184
FINANCIAL STATEMENTS 2021
Sampo plc’s balance sheet
EURm Note
ASSETS
Intangible asset
Property, plant and equipment
Buildings —
Other
Investments
Shares in Group company
Receivables from Group companies
Participating interests
Receivables from participating interests —
Other shares and participations
Financial instruments
Other investment receivables
Short-term receivables
Other receivables
Prepayments and accrued income
Cash and cash equivalents
TOTAL ASSETS
EURm Note
LIABILITIES
Equity
Share capital
Fair value reserve
Invested unrestricted equity
Other reserves
Retained earnings
Profit for the financial year
Liabilities
Long-term liabilities
Bonds
Subordinated debt securities
Short-term liabilities
Deferred tax liability
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
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Group’s notes to the financial statements Sampo plc’s notes to the financial statements
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185
FINANCIAL STATEMENTS 2021
EURm
Operating activities
Profit before tax
Adjustments:
Realised gains and losses on investments -
Other adjustments - -
Adjustments total -
Change (+/-) in assets of operating activities
Investments -
Other assets -
Total -
Change (+/-) in liabilities of operating activities
Financial liabilities -
Other liabilities -
Paid interests - -
Paid taxes -
Total - -
Net cash from operating activities
EURm
Investing activities
Investment in subsidiaries - -
Disinvestment in associates
Dividend received from associates
Other investments
Net cash from investing activities -
Financing activities
Dividends paid - -
Treasury shares - -
Issue of debt securities -
Repayments of debt securities in issue - -
Received group contribution
-
Net cash used in financing activities - -
Total cash flows -
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Net change in cash and cash equivalents -
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
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186
FINANCIAL STATEMENTS 2021
SAMPO PLC’S NOTES TO THE FINANCIAL STATEMENTS
Summary of significant
accounting policies
..........................................................
Notes to the income statement 1–4
Sales ............................................................................................
Otheroperatingexpenses ..................................................
Auditors’fees ..........................................................................
Financialincomeandexpense ..........................................
Notes to the assets 5–9
ReceivablesfromGroupcompanies ...............................
Financialinstruments ...........................................................
Otherinvestmentreceivables ...........................................
Otherreceivables ...................................................................
Prepaymentsandaccruedincome .................................
Notes to the liabilities 10–14
Movementsintheparentcompany’sequity ...............
Sharecapital ............................................................................
Otherliabilities ........................................................................
Accrualsanddeferredincome ..........................................
Long-termliabilities ..............................................................
Note to the income taxes 15
Deferredtaxassetsandliabilities ....................................
Notes to the off-balance sheet
liabilities and commitments 16–18
Pensionliabilities ....................................................................
Futurerentalcommitments ...............................................
Otherliabilitiesandcommitments ..................................
Notes to the staff and management 19–21
Stanumbers ..........................................................................
Boardfeesandmanagementremuneration................
PensioncontributionstotheCEOdeputyCEO
andthemembersoftheBoard ........................................
Note to the shares held 22
SharesheldasofDec ..........................................
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187
FINANCIAL STATEMENTS 2021
Summary of significant accounting policies
The presentation of Sampo plc’s financial statements have been prepared in accordance with
the Finnish Accounting Act and Ordinance.
Foreign currency translation
Foreign currency transactions are translated using the exchange rate prevailing at the dates of
transactions or the average rate for the month. The Balance sheet items denominated in foreign
currencies are translated at the rate prevailing at the balance sheet date.
The exchange differences are recognised in the income statement.
Derivatives
Financial derivatives held for trading are initially 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. Derivative instruments are carried as assets when the fair value is positive
and as liabilities when the fair valued is negative.
Only financial derivatives held for trading has been used. More information see the Group note
Summary of Significant Accounting Policies.
Non-current assets
Intangible and tangible assets are stated at acquisition cost less depreciation. Investments in
subsidiaries and other companies are measured at acquisition cost.
Sampo plc’s notes to the financial statements
Financial instruments and risk management
The Finnish Accounting Act chapter 5 section 2a§ applies and the financial instruments
are recognised at fair value, more information in the Group note Summary of Significant
Accounting Policies. The risk management disclosure includes detailed information over the risk
management.
Revenue recognition
Revenue is recognised when they occur.
Leases
Lease payments are treated as rentals.
Income taxes
The income statement includes the company’s income taxes based on taxable profit for the
period as well as adjustments to previous years. Income taxes related to items recognised
directly to equity or other comprehensive income will also be recognised accordingly.
Board of Directors’
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188
FINANCIAL STATEMENTS 2021
Notes to the income statement 1–4
1 Sales
EURm
Income from investment operations
Other
Total
2 Other operating expenses
EURm
Rental expenses - -
IT expenses - -
External services - -
Other sta costs - -
Other - -
Total - -
Item Other includes e.g. administration fees.
3 Auditors’ fees
EURm
Auditing fees - -
Tax consultancy —
Other fees — -
Total -0.4 -0.5
The AGM on 19 May 2021 elected Deloitte Oy as Sampo plc’s auditor. The previous auditor was
Ernst & Young Oy.
4 Financial income and expense
EURm
Dividend income
Interest income
Interest expense - -
Gains on disposal
Exchange result -
Other - -
Total
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FINANCIAL STATEMENTS 2021
Notes to the assets 5–9
5 Receivables from Group companies
EURm
Carrying amount at the beginning of the year
Additions
Disposals - -
Carrying amount at the end of the year
Receivables are subordinated loans issued by subsidiaries. More information in the consolidated
note 24 Subordinated debts and other financial liabilities.
6 Financial instruments
Fair value changes Fair value changes
EURm Fair value
Recognised
in p/l
Recognised
in fair value
reserve
Fair
value
Recognised
in p/l
Recognised
in fair value
reserve
Avalaible-for-sale
equity securities - - -
7 Other investment receivables
Fair value changes Fair value changes
EURm Fair value
Recognised
in p/l
Recognised
in fair value
reserve
Fair
value
Recognised
in p/l
Recognised
in fair value
reserve
Bonds
Market money
Total
8 Other receivables
EURm
Trading receivables
Other
Total 20 35
Item Other includes Group receivables 15 (14) million euros.
9 Prepayments and accrued income
EURm
Accrued interest
Derivatives
Other
Total 42 54
Fair value Fair value
Derivates EURm
Contract/
notional
value Assets Liabilities
Contract/
notional
value Assets Liabilities
Derivates held for trading
Interest rate derivatives
Foreign exchange derivatives
Total
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FINANCIAL STATEMENTS 2021
Notes to the liabilities 10–14
10 Movements in the parent company’s equity
Restricted equity Unrestricted equity
EURm Share capital
Fair value
reserve
Invested
unrestricted capital Other reserves
Retained
earnings Total
Carrying amount at 1 January 2020
Dividends - -
Financial assets available-for-sale
- recognised in equity - -
- recognised in p/l
Profit for the year
Carrying amount at 31 December 2020
Restricted equity Unrestricted equity
EURm Share capital
Fair value
reserve
Invested
unrestricted capital Other reserves
Retained
earnings Total
Carrying amount at 1 January 2021
Dividends - -
Treasury shares - -
Financial assets available-for-sale
- recognised in equity
- recognised in p/l - -
Profit for the year
Carrying amount at 31 December 2021
Distributable assets
EURm 2021 2020
Parent company
Profit for the year
Retained earnings
Invested unrestricted capital
Other reserves
Total
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191
FINANCIAL STATEMENTS 2021
11 Share capital
Information on share capital is disclosed in note 29 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
14 Long-term liabilities
EURm
Bonds
Subordinated debt securities
Total
More information in the consolidated note 24 Subordinated debts and other financial liabilities.
Note to the income taxes 15
15 Deferred tax assets and liabilities
EURm
Deferred tax assets
Losses —
Deferred tax liabilities
Fair value reserve -
Total, net -
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192
FINANCIAL STATEMENTS 2021
Notes to the off-balance sheet liabilities and
commitments 16–18
16 Pension liabilities
The basic and supplementary pension insurance of Sampo plc’s staff is handled through
insurance policies in pension insurance companies in Finland and Sweden.
17 Future rental commitments
EURm
Not more than one year
Over one year but not more than five years
Total
18 Other liabilities and commitments
Finnish VAT group commitment EUR 2.3 million (1.7).
Hastings Group Holdings Ltd Facility Agreement GBP 75 million termination date 2026 in October.
Fund commitments EUR 7.9 million (7.9).
Notes to the staff and management 19–21
19 Staff numbers
EURm
Average
during
theyear
Average
during
theyear
Full-time sta
Part-time sta
Temporary sta
Total
20 Board fees and management remuneration
(EUR thousand)
Group Executive Director Torbjörn Magnusson
Members of the Board of Directors
Björn Wahlroos
Fiona Clutterbuck
Christian Clausen
Georg Ehrnrooth
Jannica Fagerholm
Johanna Lamminen
Markus Rauramo —
Risto Murto
Antti Mäkinen —
In accordance with the decision of the Annual General Meeting in 2021, the company has
compensated the transfer tax related to the acquisition of the company shares, in total EUR
6,522.68 (EUR 1,468.85 pertaining to the Chairman, EUR 1,172.84 EUR to the Vice Chairman and
EUR 3,880.99 to the other Finnish members of the Board).
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FINANCIAL STATEMENTS 2021
21 Pension contributions to the CEO, deputy CEO
and the members of the Board
(EURk)
Supplementary
pension costs
Statutory
pension costs Total
Pension contributions paid during the year
President/CEO
1)
Former Chairmen of the Board
Kalevi Keinänen
2)
Former Presidents/CEOs
Harri Hollmen
2)
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 2021 is based on a TyEL
index adjustment.
Note to the shares held 22
22 Shares held as of 31 Dec 2021
Company name
Percentage of
share capital held
Carrying amount
EURm
Group undertaking
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 Holding Ltd, Helsinki Finland
Other
Sampo Capital Oy, Helsinki Finland
Sampo Plc has a branch located in Sweden.
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FINANCIAL STATEMENTS 2021
Approval of the Financial Statements and
the Board of Directors’ report
Helsinki, 9 February 2022
Sampo plc
Board of Directors
Christian Clausen Fiona Clutterbuck Georg Ehrnrooth
Jannica Fagerholm Johanna Lamminen Risto Murto
Markus Rauramo
Björn Wahlroos Torbjörn Magnusson
Chairman Group CEO
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195
FINANCIAL STATEMENTS 2021
To the Annual General Meeting of Sampo plc
Report on the Audit of
Financial Statements
Opinion
We have audited the financial statements of Sampo Oyj
(business identity code 0142213-3) for the year ended 31
December, 2021. 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, financial
performance and cash flows in accordance with
Inter national 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 the 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 regula-
tions 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 32 to the consolidated financial state-
ments and in note 3 to the parent company notes.
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 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.
Auditor’s Report
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Group’s notes to the financial statements
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Auditor’s Report
196
FINANCIAL STATEMENTS 2021
Key audit matter How our audit addressed the key audit matter
Valuation of insurance contract liabilities
We refer to Summary of Significant Accounting policies in the financial statements as well as
notes 22 and 23.
As at 31.12.2021 Sampo Group has insurance contract liabilities totalling EUR 39,919
million ( 2020: EUR 36,241 million), consisting of both life and non-life insurance contract
liabilities.
Valuation of insurance contract liabilities requires significant management judgment and
accounting assumptions about uncertain future events which may materially affect the
carrying amount.
The methods and models applied may have a significant influence on the measurement of
provisions for insurance contracts.
Key assumptions which affect the carrying amount include inflation, interest rates as well
as estimated future payments for claims.
We have assessed the measurement of the provisions for insurance contracts as calculated
by Management. Our audit procedures included testing of the key controls relating to
valuation of insurance liabilities and key assumptions.
We have utilized Deloitte’s actuarial experts in audit and assessed methods, models and
data used based on historical development and market trends.
We have compared the information used in the calculation with the historical data.
Further, we have analysed the developments in risk, interest and cost results.
We have evaluated and challenged changes in the key assumptions and models applied
and recalculated the claims outstanding provisions for insurance contracts for selected
sectors.
We have assessed the disclosures in the financial statements.
Board of Directors’
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Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Auditor’s Report
197
FINANCIAL STATEMENTS 2021
Key audit matter How our audit addressed the key audit matter
Valuation of financial assets
We refer to Summary of Significant Accounting policies in the financial statements as well as
notes 9 and 14-17.
The Group’s investments amount to EUR 23,321 million (2020: EUR 24,420 million).
Financial assets represent a significant part of the company’s balance sheet. The use of
different valuation techniques and assumptions may result in different estimates of fair
value.
Major part of the Group’s financial assets are measured at fair value. At level 1, the
valuation of the financial asset is based on the quoted price in an active market. Level 2
valuation also uses other verifiable prices as inputs, either directly or derived from them,
using valuation techniques. At level 3, valuation is based on non-verifiable market prices.
Audit focus areas relate to valuations on level 2 and 3 in line with IFRS in which the
valuation techniques include inputs which are not directly verifiable on the markets.
Our audit procedures have included the evaluation of the internal controls, appropriate-
ness of accounting policies used and the reasonableness of accounting estimates made by
management.
We have evaluated the appropriateness of the valuation models and accounting policies
used by the company to assess whether the fair value measurement is in accordance with
IFRS. We have requested external confirmations to verify the existence of the investment.
Together with our valuation specialists, we have compared the assumptions used by
management in the valuation calculation. We have utilized Deloitte’s valuation analytics
and performed the recalculation of fair values based on the information available on the
market.
For financial assets that are valued on the basis of non-market information, we have also
evaluated the practices and assumptions used by management in determining fair values.
We have assessed the disclosures in the financial statements.
Board of Directors’
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Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Auditor’s Report
198
FINANCIAL STATEMENTS 2021
Key audit matter How our audit addressed the key audit matter
Valuation of Nordea shares
We refer Summary of Significant Accounting policies in the financial statements as well as
notes 13 and 34.
Nordea is recorded in the consolidated balance sheet as an ’asset held for sale’ with a carrying
amount of EUR 2,189 million (2020: Investment in associates EUR 4,822 million).
During the financial year, Sampo has reduced its ownership in Nordea Bank Abp from 15.87% to
6.2% through sales via accelerated bookbuilts. Due to those sales and the significant and prolonged
increase in Nordea’s quoted share price, the previously booked impairment of EUR 899 million was
fully reversed during the financial year.
After the share sale in October 2021, management concluded that the requirements of IFRS
5 Non-current Assets Held for Sale and Discontinued Operations are met and classified the
remaining Nordea shares as assets held for sale. In addition, management concluded that it still
has significant influence in Nordea as at 31 December 2021 and therefore measures the remaining
Nordea shares at the lower of its carrying amount and fair value less cost to sell.
Our audit procedures included the review of the accounting treatment of the remaining
Nordea shares as well as management’s assessment on the reversal of previously
recorded impairment.
We have evaluated the assessment of the carrying amount and recognition of impairment
reversals after the individual share sales. In addition, we have assessed Sampo’s share
of the associates profit, impacted by Sampo’s ownership for the individual reporting
periods.
We have utilized valuation experts to evaluate assumptions and methodologies used
by Sampo to determine whether the Group remains to have significant influence over
Nordea and whether a significant and prolonged increase in Nordea’s share price exist.
In addition, we assessed if the requirements of IFRS 5 Non-current Assets Held for Sale
and Discontinued Operations are met.
We have assessed the disclosures in the financial statement.
Board of Directors’
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FINANCIAL STATEMENTS 2021
Responsibilities of the Board of
Directors and the Group CEO
for the Financial Statements
The Board of Directors and the Group CEO are responsible
for the preparation of consolidated financial statements
that give a true and fair view in accordance with Interna-
tional 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 Group CEO are also responsible
for such internal control as they determine is necessary
to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the Board of Direc-
tors and the Group CEO 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.
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.
• Conclude on the appropriateness of the Board of
Directors’ and the Group CEO’s use of the going concern
basis of accounting and based on the audit evidence
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 uncer-
tainty exists, we are required to draw attention in our
auditor’s report to the related disclosures 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.
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
Board of Directors’
Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Auditor’s Report
200
FINANCIAL STATEMENTS 2021
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.
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General
Meeting on 19 May, 2021, and our appointment represents
a total period of uninterrupted engagement of 1 year.
Other information
The Board of Directors and the Group CEO are responsible
for the other information. The other information com-
prises the report of the Board of Directors.
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 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.
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, we conclude
that there is a material misstatement of the report of the
Board of Directors, we are required to report that fact. We
have nothing to report in this regard.
Other opinions
We support that the financial statements should be adopted.
The dividend distribution proposal by the Board of Directors
is in compliance with the Limited Liability Companies
Act. We support that the Board of Directors of the parent
company and the Group CEO should be discharged from
liability for the financial period audited by us.
Helsinki, 11 March 2022
Deloitte Oy
Audit Firm
Jukka Vattulainen
Authorised Public Accountant (KHT)
Board of Directors’
Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Auditor’s Report
201
FINANCIAL STATEMENTS 2021
To the Board of Directors of Sampo Oyj
We have performed a reasonable assurance engagement
on whether the iXBRL tagging of the consolidated financial
statements in the ESEF consolidated financial statements
(743700UF3RL386WIDA22-2021-12-31-en.zip) of Sampo Oyj
(0142213-3) for the financial year 1.1.-31.12.2021 has been
prepared in accordance with the requirements of Article 4 of
Commission Delegated Regulation (EU) 2018/815 (ESEF RTS).
Responsibilities of the board of
directors and the Group CEO
The Board of Directors and the Group CEO are responsible
for the preparation of the report of the Board of Directors
and financial statements (ESEF financial statements) that
comply with the requirements of ESEF RTS. This responsi-
bility includes:
• preparation of ESEF financial statements in XHTML
format in accordance with Article 3 of ESEF RTS
• tagging the consolidated financial statements in the
ESEF financial statements with iXBRL tags in accord-
ance with Article 4 of ESEF RTS, and
• ensuring consistency between ESEF financial state-
ments and audited financial statements.
The Board of Directors and the Group CEO are also
responsible for such internal control as they determine
is necessary to enable the preparation of ESEF financial
statements in accordance with the requirements of ESEF
RTS.
Auditor’s independence and
quality control
We are independent of the company in accordance with
the ethical requirements that are applicable in Finland
and are relevant to the engagement we have performed,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
The auditor applies International Standard on Quality
Control 1 and, accordingly, maintains a comprehensive
system of quality control including documented policies
and procedures regarding compliance with ethical
requirements, professional standards, and applicable legal
and regulatory requirements.
Independent auditor’s report on the ESEF
consolidated financial statements of Sampo Oyj
Board of Directors’
Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Auditor’s Report
202
FINANCIAL STATEMENTS 2021
Auditor’s responsibilities
In accordance with the engagement letter, we express
an opinion on whether the tagging of the consolidated
financial statements in the ESEF financial statements has
been prepared in all material respects in accordance with
the requirements of Article 4 of ESEF RTS. We conducted
a reasonable assurance engagement in accordance with
International Standard on Assurance Engagements
ISAE3000.
The engagement includes procedures to obtain evidence
on:
• whether the tagging of the consolidated financial
statements in ESEF financial statements has been
prepared in all material respects in accordance with the
requirements of Article 4 of ESEF RTS, and
• whether the ESEF financial statements are consistent
with the audited financial statements.
The nature timing and extent of the procedures selected
depend on the auditor’s judgment. This includes the
assessment of risk of material departures from the
requirements set out in ESEF RTS, whether due to fraud
or error.
We believe that the evidence we have obtained is suffi-
cient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the tagging of the consolidated
financial statements in the ESEF financial statements
(743700UF3RL386WIDA22-2021-12-31-en.zip) of Sampo Oyj
for the financial year 1.1.-31.12.2021 has been prepared in all
material respects in accordance with the requirements of
Article 4 of ESEF RTS.
Our audit opinion on the consolidated financial statements
of Sampo Oyj for the financial year 1.1.-31.12.2021 has
been expressed in our auditor’s report dated 11.3.2022.
In this report, we do not express an audit opinion or any
other assurance conclusion on the consolidated financial
statements.
Helsinki 31 March 2022
Deloitte Oy
Audit Firm
Jukka Vattulainen
APA
Board of Directors’
Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
Auditor’s Report
203
FINANCIAL STATEMENTS 2021
Board of Directors’
Report
Auditor’s Report
Group’s IFRS Financial Statements
Group’s notes to the financial statements
Sampo plc’s Financial Statements
Sampo plc’s notes to the financial statements
204
BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2021
Sampo plc, Fabianinkatu 27, 00100 Helsinki, Finland
Phone: +358 10 516 0100 | Business ID: 0142213-3
www.sampo.com
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