SAMPO PLC STOCK EXCHANGE RELEASE 19 March 2014 at 8.55 am
Mandatum Life to receive Suomi Mutual's group pension insurance portfolio
Sampo's subsidiary Mandatum Life Insurance Company (Mandatum Life) and Suomi Mutual Life Assurance Company (Suomi Mutual) have agreed on the transfer of Suomi Mutual's with-profit group pension portfolio to Mandatum Life. The portfolio transfer is scheduled to take place on 30 December 2014. The portfolio transfer requires the approval of both companies' Annual General Meetings and the consent of the Financial Supervisory Authority. The Annual General Meetings of Mandatum Life and Suomi Mutual will be held on 7 May 2014.
Suomi Mutual's group pension portfolio comprises approximately 2,300 policies and 34,000 members. The insurance portfolio is closed, so no new members can be included in the existing insurance contracts.
Corporate customers and entrepreneurs are among Mandatum Life's focus areas, and the company is the market leader in group pension insurance. The portfolio transfer will enable more efficient services and cost savings as Mandatum Life continues to develop its operations as a provider of insurance services for corporates and entrepreneurs.
In the portfolio transfer, assets corresponding to the proportion of the group pension portfolio of Suomi Mutual's total assets will be transferred from Suomi Mutual. The final amount of the transferred assets will be established in connection with the portfolio transfer, but it is estimated to have been around EUR 1.3 billion on 31 December 2013. The amount corresponding to the transferred assets will be appropriated in its entirety to Mandatum Life's technical provisions at the time of the portfolio transfer. The transferred amount is expected to enable a decrease in the discount rate in technical provisions to 1.5 per cent, as well as mortality and expense supplements and substantial provisions for future client bonuses.
A separate profit distribution policy has been agreed on for the insurance portfolio, stating that Mandatum Life will carry the insurance and expense risks inherent in the insurance portfolio in the future. As regards the investment assets covering the insurance portfolio, it has been agreed that the first 1.5 per cent will be used for the benefit of the insurance portfolio, and of any excess returns, 65 per cent will be allocated to the insurance portfolio and 35 per cent to Mandatum Life. In the event of investment returns remaining below 1.5 per cent, the liability for future bonuses in technical provisions will be decreased first, after which Mandatum Life will bear the cost. No separate consideration will be paid for the transferred portfolio.
The transferred insurance portfolio and the covering assets will be segregated from the rest of Mandatum Life's insurance portfolio and reported as a separate segment in Mandatum Life's IFRS financial statements. Mandatum Life and Suomi Mutual have agreed on the establishment of a special monitoring group as part of the implementation of the insurance portfolio transfer. The key task of the monitoring group will be to oversee the execution of the profit distribution policy concerning the transferred insurance portfolio. The group is not a decision-making body and therefore cannot make decisions that are binding on the parties. Its members will be representatives of Suomi Mutual and the policyholders.
The portfolio transfer is expected to have a positive impact on Mandatum Life's risk and expense results. The investment result is strongly tied to the development of the capital markets. All in all the portfolio transfer is expected to have a positive, albeit relatively minor impact on Sampo Group's results.
SAMPO PLC
Jarmo Salonen
Head of Investor Relations and Group Communications
Tel. + 358 10 516 0030
For more information, please contact:
Jarmo Salonen
Head of Investor Relations and Group Communications
Tel. +358 10 516 0030
Maria Silander
Press Officer
Tel. +358 010 516 0031
Jukka Kurki
Chief Financial Officer, Mandatum Life Insurance Company
Tel. +358 10 516 7203
Niina Riihelä
Vice President, Marketing and Communications, Mandatum Life Insurance Company Limited
Tel. +358 40 728 1548
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Financial Supervisory Authority
www.sampo.com