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Sampo Group's funding consists of senior debt instruments and subordinated obligations eligible for Solvency Capital.
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:
11 October 2018
|Instrument and Principal||Coupon||Swap||Effective Rate||Maturity|
|CPs issued 195 EURm||Euribor+
|Senior Bond 500 EURm||1.125%||Euribor 3M+ 0.586125%||1.1640%||24 Mar 2019|
|Senior Bond 2,000 SEKm||Stibor 3M+ 0.77%||EUR 1.007%||0.2631%||28 May 2020|
|Senior Bond 1,000 SEKm||1.250%||-||1.0070%||28 May 2020|
|Senior Bond 500 EURm||1.500%||Euribor 6M+
|1.5920%||16 Sep 2021|
|Senior Bond 700 SEKm||0.875%||Euribor 6M+
|0.1061%||23 May 2022|
|Senior Bond 1,300 SEKm||Stibor 3M+ 0.55%||-||0.1181%||23 May 2022|
|Senior Bond 750 EURm||1.000%||EUR 6M+
|1.0060%||18 Sep 2023|
|Senior Bond 500 EURm||1.250%||EUR 6M+
|0.4660%||20 May 2025|
|Senior Bond 500 EURm||1.625%||0.288%||21 Feb 2028|
|Senior Bond 1,000 NOKm||3.100%||EUR 6M+
|0.5010%||7 Sep 2028|
|Senior Bond 500 EURm||2.250%||EUR 6M+
|0.8120%||27 Sep 2030|
30 September 2018