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IR Blog

Why invest in Sampo?
IR Blog provides information about Sampo as an investment case and the Group's businesses and markets.

10 September 2018

Mandatum Life - An Expert in Money and Life

Over the years, Mandatum Life, a subsidiary of Sampo has strengthened its position as one of the leading and respected financial services companies in Finland.

Mandatum Life provides different kind of life insurance and wealth management services for private customers, entrepreneurs and corporates. The company also provides, among other things, services for inheritance planning and remuneration programs. Mandatum Life serves 250,000 private and 50,000 corporate customers and operates in Finland and in the Baltics.

Mandatum Life's Key Figures20172016
Premiums written, EURm 960 1,116
Net income from investments (excl. unit-linked contracts), EURm 376 356
Profit before taxes, EURm 236 210
Expense result, EURm 33 26
Risk result, EURm 35 31
Technical reserves, EURm 11,600 11,300
Solvency ratio, % 182 160
Number of staff (FTE) 521 542
Great Place to Work (Finland) ranking 15th 15th


Petri Niemisvirta, the Chief Executive Officer, how does Mandatum Life differ from its competitors?

"I believe that we have, by far, the best knowledge in life insurance in Finland. It is the result of the long experience and culture that has formed in the company over the years. One thing that has helped us is the structure of Sampo Group. Mandatum Life is an independent company, not just one department of a bigger group. That gives us very good opportunities to develop our company.

In addition, our model to provide insurance and wealth management services under the same roof, combined with the opportunities of co-investing, is quite unique. Co-investing, which means that we invest our own money and our customers' money in the same assets, is one of our most remarkable services creating value to our customers. We have also plenty of knowledge of alternative investments, which enjoy increasing demand all the time."

Mandatum Life has a leading position in Finland, but the company operates also in Estonia, Latvia and Lithuania. How would you describe the market?

"For now, it is quite small market, as measured by premium volumes, but we see good growth opportunities there. However, the market is quite challenging: three countries, three cultures and three languages plus Russian. We don't have a major distributor like Danske Bank in Finland and our name is not as familiar there as in here. That is why the growth requires more hard work."

In June, Mandatum Life and Danske Bank agreed to continue their co-operation. How important is this agreement?

"For sure, it is a very important agreement for us. Some years ago, the share of products and services distributed by Danske Bank was, at its best, 40 to 50 per cent of the total volume, compared to 15 to 20 per cent last year. I'm very confident that with this new agreement we can raise the sales back to the top level and, at the same time, maintain the excellent level in our own channels. Both us and Danske have a good premise for increasing sales. We have already seen some good signs."

What is the state of the economy and financial markets from Mandatum Life's point of view?

"In Finland, the economy and Finnish companies are doing well, which reflects to our businesses, especially in the corporate customers segment. There is demand for services related to remuneration programs, because companies compete for skillful new employees and try to hold on tight their existing ones. By the same token, the good momentum in the economy and financial markets increases activity in the private customers segment.

In the financial markets, the bull run of stocks has continued, but on the other hand, earnings have grown as well, particularly in the U.S. As far as I'm concerned, stocks are not cheap, but not that expensive either because earnings are still growing. Using the method of exclusion, stocks and alternative investments are still the best asset classes to invest to. From our product range's point of view, this is a good thing.

Of course, in the big picture, there are different kind of concerns to worry about, such as the fear of trade war and the rise of protectionism. If escalated, the trade war would cause significant damages to the financial markets and the economy of Finland, which is dependent on exports. In addition, the state of the emerging markets and especially the currency crisis in Turkey are worthwhile to keep an eye on."

Equity investment account, which is already used in other Nordic countries, will be introduced in Finland as well. How this will affect Mandatum Life's business?

"The account is planned to be introduced in 2020 and the final terms are still blur. Thus, it is hard to make any estimates at this point. Instead of a company point of view, I like to pay attention to the big picture.

It is very important that the government makes decisions that encourage people to save and invest in more risky assets, not just in bank accounts. In Sweden, there are good incentives to invest in stocks. As a result, Swedes have benefitted from the ongoing bull market, whereas in Finland, the net inflow of mutual funds has lagged but the money pile laying useless in the bank accounts has increased by EUR 10 billion.

It is important to notice that if the return on bank accounts is zero, the capital income tax to the state is zero too. Increasing the incentives for saving and investing would be a win-win situation for all parties: for the private investors, for the financial industry and for the whole economy. Unfortunately, there is a risk that tax populism leads to increasing taxation, which would further weaken the incentives to save and invest."

What are the key figures in Mandatum Life's financial reporting, that Sampo shareholders should pay attention to?

"I would recommend to pay attention to expense result, which tells how the fees and commissions of life insurance business have developed compared to expenses.

Because Sampo is a dividend company, I would pay attention to Mandatum Life's ability to pay dividend for the parent company. This is influenced, among other things, by the pace at which our with-profit insurance portfolio ages and shrinks, because the portfolio requires lots of capital. In the past years the portfolio has contracted at around EUR 200 million annually.

In addition to solid figures, investors should also look at the so called softer indicators, such as the results of the satisfaction surveys. High customer satisfaction gives some indication of the future premium income development. Equally, employee satisfaction will help the company to keep the current top talents and attract new ones."

More about Mandatum Life

Mirko Hurmerinta

IR and Communications Specialist, Sampo plc