The market impacts of the coronavirus epidemic weighed down the result; the solvency position is still good.
Mandatum Life’s result before taxes in January–March 2020 was EUR -16 million (72). Comprehensive income after taxes, taking into account changes in market values, amounted to EUR --323 million (113). Annualised return on equity (RoE) was -105.2 per cent (37.6). The fair value reserve decreased to EUR 128 million (438) in the first quarter. The expense result increased to EUR 5.7 million (5.2) in January-March, and the risk result was EUR 5.2 million (4.9).
Premiums written on the company’s own account totalled EUR 287 million (238) in the first quarter of 2020. Premiums written grew in January-February but declined in March due to market turbulence. Premiums written on unit-linked insurance amounted to EUR 253 million (187).
The return on Mandatum Life’s investment assets at fair value was -8.7 per cent (4.0) in January–March 2020, and the return on the segregated portfolio’s investment assets at fair value during the same period was 6.6 per cent (2.7).
At the end of March 2020, Mandatum Life’s investment assets totalled EUR 5.1 billion (5.7), excluding the EUR 7.2 billion (8.1) in assets covering unit-linked technical provisions.
The investment assets covering Mandatum Life’s original with-profit liabilities at the end of March 2020 totalled EUR 4.2 billion (4.5) at market values. The value of the investments covering the segregated portfolio was EUR 0.9 billion (1.0).
Mandatum Life’s technical provisions stood at EUR 11.0 billion (12.0) at the end of March 2020. Unit-linked technical provisions amounted to EUR 7.2 billion (8.1), representing 65 per cent (64) of the total technical provisions. With-profit technical provisions stood at EUR 3.8 billion (3.9) at the end of March 2020. The insurance portfolios with a high technical rate of interest (4.5 and 3.5 per cent) decreased by EUR 65 million to EUR 2.1 billion in January–March 2020.
Overall, Mandatum Life has strengthened its technical provisions by EUR 206 million (230) in response to the low interest rate level. The figure does not include items related to the segregated portfolio. The discount rate for the rest of 2020 and for 2021 is 0.25 per cent. The discount rate for 2022 is 1.25 per cent. The technical rate of interest on the segregated group pension insurance portfolio is 0.0 per cent, and EUR 256 million (263) has been reserved for lowering the discount rate.
At the end of March, Mandatum Life’s solvency ratio was 205 per cent (194% in 12/2019). The comparison figure has increased from the 176 per cent published at the turn of the year mainly due to the cancellation of the dividend of EUR 150 million that had been decided on earlier. The solvency ratio without the transitional provisions stood at 166% (159).
Statement by CEO Petri Niemisvirta:
“Mandatum Life had a strong financial standing at the onset of the coronavirus crisis. We proactively prepared for the crisis and held the first meeting to prepare for the epidemic at the end of January. The response team in its current form was set up on 3 February and has convened ever since. Our entire personnel started working from remotely on 13 March, and we continue to follow this approach.
While the coronavirus crisis has not changed Mandatum Life’s strategy, it certainly has changed our tactics. We still seek growth where we used to. The co-investment approach that we offer our customers works well and the company’s solvency is at a good level. Thanks to our excellent technological capabilities, we have been able to operate normally, except for face-to-face contacts. We have been able to do business as usual and managed to maintain customer satisfaction at a good level.
The company’s liquidity is expected to remain good, because changes in the technical provisions on with-profit insurance are highly predictable. In addition, the bond coupon yields and maturities cover the pensions to be paid over the next two years.
The coronavirus epidemic is not expected to have a significant impact on the risk result. The expense result is expected to suffer somewhat with the decrease in fee income related to unit-linked insurance.
I am confident that our company’s resilience will get us through this exceptional situation. Our strategy and operational model have proven successful in this extremely difficult environment,” says Mandatum Life’s CEO, Petri Niemisvirta.
Mandatum Life’s key figures 1–3/2020
Premiums written, own account: EUR 287 million (238)
Result before taxes: EUR –16 million (72)
RoE: –105.2% (37.6)
Solvency ratio: 205% (194% in 12/2019), and without transitional provisions 166% (159% in 12/2019)
Return on investments: –8.7% (4.0), and on the segregated portfolio –6.6% (2.7)
Average number of staff: 578 (545)
Mandatum Life’s result in its entirety is available at: www.sampo.com/result
Additional information:
Petri Niemisvirta, CEO: petri.niemisvirta@mandatumlife.fi, tel. +358 10 516 7200
Jukka Kurki, CFO: jukka.kurki@mandatumlife.fi, tel. +358 50 424 6630
Niina Riihelä, Vice President, Marketing and Communications: niina.riihela@mandatumlife.fi, tel. +358 40 728 1548