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Capital redemption policy
Commonly used life policy without any insurable risk. Policy consists purely of savings.
Catastrophe Risk can be seen as an extreme case of premium risk. It is the risk of extreme or exceptional events, such as natural catastrophes, where the pricing and setting of provisioning assumptions include significant uncertainty. These events may lead to significant deviations between actual claims and the total expected claims resulting into a loss or adverse changes in the value of insurance liabilities.
Part of insurance risk transferred to reinsurers.
Direct insurance company that reinsures a part of its direct business to a reinsurer.
Change in fair value reserve
Käyvän arvon rahaston muutos
Change in the fair value reserve includes potential cash flow hedges as well as unrealised profits and losses i.e. changes in the fair value of financial instruments classified as available-for-sale investment assets.
These changes in value are recognized in the income statement when the investments are sold or they expire. The change in the fair value reserve includes also the change in the tax liability related to value changes. Change in the fair value reserve is an important element in analyzing the result, especially in life insurance business.
Change in liabilities for insurance and investment contracts
Vakuutus- ja sijoitussopimusten velkojen muutos
In life insurance business the insurance portfolio is classified as either insurance contracts or investment contracts depending on, whether they carry insurance risk or not. In life insurance business area "investment contracts" comprise only capital redemption policies. In other cases the liabilities are insurance liabilities.
The amount of technical provisions is determined at every balance sheet date. The change in liabilities for insurance and investment contracts is the difference between the value at the balance sheet date in year x and the value a year earlier.
The observed relationship during a specific period between the number of claims arising within a certain category of insurance (a certain insurance portfolio) and the number of insurance policies within the same category (the portfolio). Does not include large claims.
Activities in connection with the investigation, settlement and payment of claims from the time of their occurrence until settlement.
The sum of paid claims and change in provision for claims outstanding. Includes the claims costs for the insured events during the year regardless if they have been paid during the same year or not.
When the insured event occurs the benefit paid to the named beneficiaries in insurance contracts or to the unnamed third party.
One of the most significant key figures in P&C insurance describing the efficiency of operations. It is calculated as the sum of loss ratio and expense ratio. Combined ratio is expressed as a percentage.
Adherence to laws, regulations, code(s) of conduct and standards of good practice in the industry. Sampo plc's Board of Directors has issued Sampo Group Compliance Principles on 9 May 2018.
Compliance risk is the risk of legal or regulatory sanctions, material financial loss or loss of reputation, resulting from a company failure to comply with laws, regulations and administrative orders applicable to its activities.
Compliance risk is usually a consequence of internal misconduct and hence it can be seen as a part of operational risk.
Concentration risks arise when the company’s risk exposures are not diversified enough and as a result of this for instance an individual large claim or financial market event may threaten the solvency or the financial position of the company.
Direct concentrations can evolve within separate activities – large single name or industry specific insurance or investment exposures – or across the activities when a single name or an industry is contributing widely on profitability and risks of the company through both insurance and investment activities. Concentration risk may materialize also 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. In that case concentration risk can be seen as part of strategic risk.
Consolidated Group SCR
Ryhmän konsolidoitu SCR
Solvency capital requirement calculated for the Solvency II regulated group. In Sampo's case, this group consists of Sampo plc, Mandatum Life, Topdanmark and If P&C.
Operating expenses and claims adjustment expenses divided by premiums earned in P&C insurance company. The ratio is expressed as a percentage.
Counterparty default risk
The risk that a counterparty is unable to fulfill its obligations. In case of counterparty default risk (also called as counterparty risk), final loss depends on the positive mark-to-market value of derivatives or reinsurance recoverables at the time of default, the collaterals received, and on the recovery rate. Counterparty risk is one subclass of credit risk.
Credit risk refers to negative impact in the financial results arising from increased probability of, or already occurred defaults of debtors (Issuer risk) or, in case of derivative and/or reinsurance contracts, other counterparties (Counterparty default risk).
Currency risk refers to fluctuations in the financial results and capital caused by changes in market values of financial assets and liabilities, as well as by changes in the economic value of insurance liabilities, after currency exchange rates change. Further information: Market risks