Management of the debt instruments

Sampo plc's subsidiaries conducting P&C and life insurance businesses do not use senior debt as a source of funding. However, they use subordinated obligations as part of their solvency capital in accordance with internal capitalization targets and in compliance with regulatory rules. Maturities and other terms of such liabilities are largely determined by regulatory rules and by rating agencies' criteria.

Group's parent company Sampo plc is issuing senior debt primarily for short-term liquidity management and capital structure optimization purposes. By nature, Sampo plc is structurally subordinated to its subsidiaries and the associated regulated companies, and hence it is dependent on the dividend capacity of these core holdings. As a principle, the stronger the capital adequacy and the expected profitability, and the smaller the volatility of profits at the Group level, the higher the leverage can be in the parent company.

In Sampo plc's debt management the key principles are diversification over markets, maturities and investors. Bonds issued within EMTN programme are the main sources of funding. Commercial paper markets in Finland, where Sampo plc is a regular issuer, are relatively large and utilized as well.  In addition, Sampo plc is issuing from time to time private placements with separate documentation in medium-term maturities (Senior, Separate Documentation) mostly for domestic retail investors. Loans and revolving credit facilities may also be used as a funding and liquidity management tool.

With regard to public bonds and notes, diversification over maturities and investors is sought to mitigate refinancing risk. In terms of currencies, natural choices are EUR and SEK. In terms of rates, floating rate basis is a natural choice because it acts as a hedge within the Group. However, Sampo plc is ready for issuance in any structure or currency provided that maturity, investor base and spread targets are met. Derivatives executed with ISDA/CSA counterparties are used to adjust risk profile of issued debt.

Current instruments issued by Sampo plc and the maturity structure of Sampo plc debt are as follows:

Information on the Debt Instruments Issued by Sampo plc

 11 October 2018

Debt Instruments by Maturity

30 September 2018