After a record year in 2010, 2011 proved to be challenging in many ways. A lack of confidence prevailed in the investment markets as a result of the euro area debt crisis that made investment operations difficult as well as the achievement of premium income targets.
Mandatum Life Group's profit before taxes remained at the previous year's level. The profit before taxes was EUR 137 million (2010: 142). The expense result developed positively and rose to EUR 11 million (9). The 2011 risk result was at an exceptionally high level and was EUR 25 million (23). The after-tax profit, taking into account changes in the market value of investment assets, suffered a loss of EUR 115 million (+ 332). Return on investments at fair value was -1.4 per cent (11.1). As a result of the fair value return loss, the solvency ratio fell to 20.9 per cent (25.8). The solvency ratio is still at an appropriate level and the solvency margin is still 4.6 times the set minimum.
Premium income fell short of the 2010 level, and the premium income on Mandatum Life Group's own account was EUR 849 million (1,111). The share of its Baltic subsidiary accounted for EUR 41 million (60) of this amount. The share of unit-linked investments as a proportion of premium income remained at 76 percent and premium income was EUR 648 million (843), of which the Baltic share accounted for EUR 37 million (58). Despite a lower level than sought, premium income rose to the second highest in the company's history which, considering the market situation, can be seen as good evidence of the effectiveness of the company's chosen sales strategy.
The market share of Mandatum Life's domestic operations in its priority area of unit-linked investments fell to 26.8 percent (28.1). The company's total market share of premium income was 24.9 percent (22.0) in Finland and the market share in the Baltic countries was 14 percent (20).
Mandatum Life Group's total technical provisions fell to EUR 7,303 million (7,534). Of the total technical provisions, EUR 3,054 million (3,124) are unit-linked products and the remaining 4,248 million (4,409) are with-profit products. Technical provisions related to with-profit products include approximately EUR 160 million of guaranteed interest provided in 2011 and customer bonuses. In addition, the total technical provisions included a reserve for decreased discount rates of 108 million done in response to the low interest rates. Claims were paid to customers in excess of EUR 800 million. Claims for pension payments totalled approximately EUR 310 million, paid to approximately 60,000 pension recipients. The growth in the amount of pension recipients is the main cause in the reduction of technical provisions related to with-profit products.
A comment from CEO Mr. Petri Niemisvirta:
"It's been a challenging and unpredictable year. I am glad we maintained our profits at a good level and were able to take care of our customers' assets well.
The strategy that we have chosen was strengthened during the year by the acquisition of a new subsidiary, Innova Henkilöstörahasto- ja Eläkepalvelut Oy. The goal of Mandatum Life is to further strengthen its commitment and incentives solutions to businesses, public administrations, and in particular, the entire staff.
The cornerstones of Mandatum Life's operations are the expansion and preservation of the financial well-being of our customers and protection against risks. In 2011, we paid a total amount of claims exceeding EUR 800 million. Pensions accounted for EUR 310 million and were paid to 60,000 Finns who made voluntary supplementary pension payments."
Key figures for 2011
Total premiums written, on own account: €849 million (1,111)
Profit before taxes: €137 million (142)
Return on equity: -11.7% (36.2)
Expense ratio: 111.6% (112.1)
Solvency ratio: 20.9% (25.8)
Return on investments: -1.4% (11.1%)
Average number of staff: 521 (470)
For more information, please contact:
Mr. Petri Niemisvirta, CEO: tel. +358 10 516 7200, petri.niemisvirta[at]mandatumlife.fi
Mr. Jukka Kurki, CFO: tel. +358 50 424 6630, jukka.kurki[at]mandatumlife.fi
Ms. Niina Riihelä, Vice President, Marketing and Communications: tel. +358 40 7281 548, niina.riihela[at]mandatumlife.fi