SAMPO ANNUAL REPORT 1998 2 SAMPO ANNUAL REPORT 1998 Posal
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ARNNUAL EPORT 1998 Contents 2 Sampo Highlights 1998 3 Sampo Group Key Information 4 Chief Executive Officer’s Review Financial Statements and Notes 6 Board of Directors’ Report 17 Consolidated Profit and Loss Account 20 Consolidated Balance Sheet 22 Parent Company Profit and Loss Account 24 Parent Company Balance Sheet 26 Working Capital Flow Statement The year 1999 marks the 125th Notes to the Accounts anniversary of Kaleva Mutual Insurance 27 Accounting Principles Company and, with it, Finnish life insurance in general. For Sampo Insurance 32 Calculation Methods for the Key Figures Company, this year will be the company’s 34 Sampo Group Key Figures 90th anniversary. To celebrate these jubilees, Sampo has published an art book 36 Analyses entitled “Ars Assicurata - Sampo Art from 70 Auditors’ Report the Golden Age to the Present Day” 70 Statement by the Supervisory Board exhibiting the company’s extensive art 1 collection. The illustrations in this annual 71 Supervisory Board report originate from this book. 72 Board of Directors 74 Auditors Cover The Sampo Group 76 Private Client Services Timo Sarpaneva, 1926– Fiercy glance, 1998 78 Corporate Client Services SAMPO ANNUAL REPORT 1998 80 Major Accounts Services Timo Sarpaneva, a great master of the 84 Foreign Reinsurance Run-Off Finnish glass sculpture, very often creates the basic form of his works by combining 86 Sampo Life Insurance a circle, a square and an oval. The subject 92 Investments matter regularly springs from Finnish folk- lore. “We have to achieve self-fulfilment 96 Sampo Personnel as Finns, not by imitating others. Only thus 98 Sampo and the Environment will we be able to keep our place in the 100 Year 2000 and Euro face of fierce international competition”, as the artist himself puts it. Among the stimuli behind this work one finds features The Sampo-Varma Group of icon painting: the expressively effective colour scale and the divine eye over- 101 The Sampo-Varma Group’s Principal Shareholdings looking and protecting our earthly journey. 102 Varma-Sampo 104 Sampo Group Management Board 105 Shareholder Information 106 Sampo-Varma Group Offices 108 Investment Analyses Pages 17–69 contain the financial statements presented in full thousands of Finnish markka. The official financial statements can be inspected at the following Sampo offices: – Aleksanterinkatu 11, Helsinki (Sampo Group’s Legal Affairs) – Puolalankatu 5, Turku (Financial Administration) SAMPO HIGHLIGHTS 1998 February public limited insurance company on July taking part in Finnish Foreign Trade • Sampo made the promotion of safety 1st, 1998 was also accepted. The com- Association export network activities. for young people and families with chil- pany’s new name will be Sampo Insurance • Sampo introduced a voluntary motor dren its theme for the year and initiated co- Company plc. insurance for used cars and a 50 per cent operation with the Mannerheim League • Sampo Enterprise subsidiary AAS starting bonus. for Child Welfare. Sampo subsidiary, Risk Sampo Latvija commenced operations. • Sampo’s representative office in Mos- Management Ltd, donated 4,500 Caresam cow opened for business. car seats to the League. May • The bond with warrants offered to October March Sampo Group and Kaleva personnel was • Finnish Credit Insurance Company • Sampo published its accounts for oversubscribed. Subscriptions were conse- Ltd, founded by Hermes Kreditversiche- 1997. Sampo Group operating profit in- quently reduced by around one in four. rung, Sampo Group and the Finnish State creased to FIM 921 million and earnings • Sampo arranged a physical exercise (State Guarantee Board), commenced per share doubled to FIM 8.32. theme day for its entire personnel. operations. • Merita Plc announced Merita Group • Sampo Major Accounts Services holdings of Sampo Insurance Company June opened an office in Hamburg, focusing on plc voting shares (Sampo “A”) had fallen • Sampo announced it would handle marine and cargo insurances. from 10.26 to 0.07 per cent. loss surveys on motor vehicle and boat • Sampo Supervisory Board re-elected losses itself from the start of 1999, and stop Jyrki Juusela as Chairman. 2 April using the services of Finnish Loss Survey • Varma-Sampo announced its redemp- • The meeting of Sampo Supervisory Ltd. tion of 44.8 per cent of the Unsa shares Board appointed Mr. Jyrki Juusela owned by Sampo and Industrial Insurance, (Outokumpu Oyj) its new Chairman. July so that it would then own 100 per cent of • The FIM 100,000 Sampo Safety • Varma-Sampo Mutual Pension Insur- Unsa’s share capital. Varma-Sampo Group Award was conferred on Nuorisopalvelu ance Company commenced operations. As has a 22 per cent holding of Sampo “A” Yöjalka ry, an association from Vihti in a result of the pension companies’ struc- voting shares. southern Finland, which has for years tural reorganisation, some 70 per cent of focused on improving young people’s con- Pension-Varma’s insurance portfolio was November SAMPO ANNUAL REPORT 1998 trol over their own life, and achieved ex- transferred to Sampo Pension, which • Sampo’s Lauttasaari operations were cellent results. The theme of the 1998 became Varma-Sampo. recognised as a Green Office by the Finn- Safety Award was young people and the use ish division of the global WWF-World of intoxicants. August Wide Fund For Nature. • Unsa Ltd announced its holding of • Sampo published its Interim Report • Sampo Finance Ltd bought PCA Sampo Insurance Company plc voting for the first half. Operating profit for Janu- Hansa Asset Management Oy and shares (Sampo “A”) exceeded 15 per cent. ary - June rose to FIM 850 million (FIM Rahastoyhtiö Baltic Belt Fund Manage- • Unsa Ltd shareholders - Pension- 668 million). ment Oy. The companies were renamed Varma, Sampo, Industrial Insurance, and • Sampo Moment was introduced as a Sampo Asset Management Ltd and Sampo Kaleva - concluded a shareholder agree- new service concept aimed at small and Fund Management Ltd. Sampo an- ment on, among other things, the com- medium-sized companies. nounced it will introduce its first mutual pany’s administration and pre-emptive fund offerings to the market through these rights pertaining to Unsa shares. September companies at the beginning of 1999. • Sampo announced it had investigated • A competition to promote staff sug- co-operation possibilities with PV Group, gestions kicked off on September 1st. December but that discussions had ended without “Tuuma 98” emphasised the importance of • Sampo took the decision to establish result. making suggestions both in general and in a non-life insurance company and a risk • Sampo’s Annual General Meeting areas focusing on the preparedness of management company in Poland. approved the bond with warrants that was Sampo clients for the euro and Y2K. • Sampo Life Insurance Company Ltd to be offered to permanent personnel at • Sampo Enterprise, Sampo Life and was merged into Nova Life Insurance Sampo Group and Kaleva, as proposed by Varma-Sampo established a Sampo Award Company Ltd on December 31st. The new the Board of Directors. The AGM decided of FIM 50,000 in co-operation with the company, Sampo Life Insurance Company on a dividend of FIM 3 to be paid on each Finnish Foreign Trade Association. The Ltd, is a Sampo subsidiary. share, in accordance with the Board pro- annual award will go to a successful export posal. A proposal to make Sampo Ltd a network of medium-sized companies SAMPO GROUP KEY INFORMATION 1998 1998 1997 1997 FIM EUR FIM EUR Change % Turnover, mill. 9,815 1,651 7,848 1,320 25.1 Gross premiums written, mill. 6,516 1,096 5,784 973 12.6 Operating profit, mill. 1,254 211 921 155 36.1 Total on balance sheet, mill. 34,235 5,758 20,961 3,525 63.3 Solvency capital, mill. 14,921 2,509 10,004 1,682 49.2 Earnings per share 14.37 2.42 8.32 1.40 72.7 Net asset value per share 195.22 32.83 145.54 24.48 34.1 3 Average number of personnel 3,292 3,176 3.7 Turnover and gross premiums Net asset value/share, written, FIM m FIM SAMPO ANNUAL REPORT 1998 10000 200 8000 160 6000 120 4000 80 2000 40 0 0 94 95 96 97 98 94 95 96 97 98 Turnover Net asset value/share Gross premiums written Closing price at end of period Conversion coefficient: EUR 1 = FIM 5.94573 CHIEF EXECUTIVE OFFICER’S REVIEW 4 Oscar Kleineh,1846–1919 Harmaja Lighthouse, 1881 Oscar Kleineh, who gave up his initial romantic style in SAMPO ANNUAL REPORT 1998 favour of a realistic approach, specialised in seascapes and townscapes. His motifs ranged from Norwegian fjords to the boulevards of Paris and from the waters of the Mediterranean to the Gulf of Finland. The eye does not easily become tired of the minutely reproduced image of reality as seen in this painting, such is the fascination created by the lively waves and ships heading for Helsinki, which is visible on the horizon. he Finnish economy continued its strong growth structural reorganisation, initiated in 1992, was imple- in 1998, though the economic outlook weakened mented when the new Sampo Life officially commenced Tin some sectors at the end of the year. operations at the end of the review year. The positive This favourable development in the national economy impacts of the reorganisation are well reflected in strong was also visible in Sampo’s performance, which improved solvency and steady performance development. on the previous year for the fourth time running. The year also brought some significant disturbances, particularly in Operating profit exceeds one billion the investment market, but these did not really impact Sampo Group operating profit increased by 36 per cent to overall Sampo performance for 1998. The operating FIM 1,254 million, while earnings per share improved 73 environment remained almost constant in both life and per cent to FIM 14.37.