Mandatum Life Insurance Co. Ltd. disclosed on 27 October 2016 that it will exercise its option to sell the insurance portfolio, sold through Danske Bank's branch network in Finland, to Danske Bank or its nominee. The valuation process, by which the value of the portfolio was to be determined, is now finalized by the external valuators.
As a result of the valuation process the value of the insurance portfolio as at the 31 December 2016 is EUR 334 million. Mandatum Life and Danske Bank have agreed that the theoretical result from the beginning of 2017 until the date of the transfer as determined in the valuation process will be deducted from the final sales price. This theoretical result for year 2017 is determined to be EUR 18.1 million and for year 2018 EUR 18.6 million. Mandatum Life and Danske Bank have agreed that the actual result produced by the portfolio until the transfer remains with Mandatum Life. The Transitional Agency Agreement between Mandatum Life and Danske Bank will continue until closing.
After the transfer has been completed the transaction is expected to have a negative impact of EUR 20 - 25 million on Mandatum Life's annual profit before taxes. The transfer of the portfolio is expected to take place during 2018.
For Mandatum Life sales gain from the transaction equals the value of the insurance portfolio adjusted with items explained in the previous chapter. The sales gain is taxable under the Finnish tax law. In Sampo Group's consolidated accounts a goodwill of approximately EUR 75 million will be deducted from the sales gain. The transaction will have a positive impact on Mandatum Life's solvency position.
The sale of the portfolio is related to Mandatum Life's decision of not prolonging its agency agreement with Danske Bank as of 31 December 2016. In relation to the agency agreement Mandatum Life had the right to sell the insurance portfolio, sold through Danske Bank's branch network in Finland, to Danske Bank.
Further information:
Petri Niemisvirta
CEO, Mandatum Life
tel. +358 10 516 7200
Jukka Kurki
CFO, Mandatum Life
tel. +358 50 424 6630