INDUSTRIAL INSURANCE ANNUAL REPORT 1997 CONTENTS 2 Managing Director’s Review 4 Total Risk Costs under Control 6 Major Accounts Services Key Information 1997 7 Sampo Group Composition and Market Share 7 Operational Composition of Major Accounts Services 8 Structural Reorganisation of Life and Employment Pension Companies 9 Board of Directors’ Report 1997 12 Industrial Insurance Group Consolidated Profit and Loss Account 14 Industrial Insurance Group Balance Sheet 16 Industrial Insurance Company Ltd Profit and Loss Account 18 Industrial Insurance Company Ltd Balance Sheet Notes on the Accounts 20 Accounting Principles 22 Calculation Methods for the Key Figures 23 Industrial Insurance Company Ltd Key Figures 23 Analyses 30 Auditors’ Report 31 Administration and Auditors 32 Executive Group 33 Sampo Group Major Accounts Services 33 Major Accounts Services Operational Organisation 34 Committees 1998 36 Addresses This Annual Report does not contain Industrial Insurance Company Ltd’s official final accounts for 1997. The official final accounts can be inspected at Industrial Insurance, Vattuniemenkuja 8 A, 00210 Helsinki, Finland. MANAGING DIRECTOR’S REVIEW he past year was another year This also benefits our domestic cli- ment seems to be continuing and ac- of positive development in ents who now have access to even celerating. Tearnings for Industrial Insur- more comprehensive and competitive Our subsidiary, Sampo Industrial ance. Thanks to the return on invest- services here in Finland, too. Insurance (SII), operating out of ments, the profit for the financial year Loss prevention has a key posi- Great Britain, Germany and the almost doubled. Solvency streng- tion in our strategy. Industrial Insur- Netherlands, has established its posi- thened further as a result of an in- ance and its clients have mutual in- tion as a noteworthy insurer within crease in the value of quoted shares. terests in loss prevention and we want its own market area. We bought 100 Despite the impact of intense compe- to support our clients in this respect per cent of the company´s shares in tition in prices on major accounts in- in various ways. During the past year, 1996, so last year was its first full year surance in particular, both in Finland we have focused on developing new as a member of the Sampo Insurance and abroad, the volume of direct in- risk assessment methods and quality Group. During the review year, SII’s surance premiums written went up. systems relating to client services as result turned into profit, which was Industrial Insurance is the market well as on offering loss prevention particularly satisfying. SII works in leader in its own sector in Finland. In training to our clients. close co-operation with Industrial In- a company image survey carried out surance and Otso. The companies by TOY Research in 1997, Industrial Increased International Activities have launched a common project, In- Insurance was rated the best non-life A major part of our clientele operates dustry Focus, aimed at producing insurer in Finland. The central assess- internationally, directing their invest- new industry-specific risk manage- ment criteria of the survey included ments outside Finland. We, too, have ment solutions for the European mar- client service, and quality of products to pursue growth in international ket. and services. We also continued our markets since the growth potential in As part of the measures we have own extensive client satisfaction as- our sector in Finland is modest. taken in order to provide comprehen- sessments, in which we received not However, growth must be profitable, sive services, we have also upgraded only high marks but also invaluable and therefore we specialise in those our international co-operation net- feedback we can use to further up- industrial segments and lines of insur- work. Last year we concluded co-oper- grade our operations. This year we ance in which our expertise has tra- ation agreements with insurance will extend our survey to brokers in ditionally been strong. companies overseas, which means Western and Central Europe. We have developed our interna- that we can now offer services cover- tional service skills with determin- ing practically the whole industrial- Renowned for Our Expertise ation. Our own companies handle ised part of the world. Our partners Sampo’s Major Accounts Services client service in an extended home are reputable and solvent companies unit wants to stand out through its market area which includes the Bal- providing high-quality services in the expertise, both in Finland and abroad. tic Rim and Western and Central Eu- field of industrial risk management. Our operating policy, which is rope. Elsewhere in the world, service The main purpose of the network is typical in the Nordic Countries, en- is provided by our network partners. to give our clients a worldwide ser- ables us to offer a wide range of ser- During the year under review, an vice, but it also provides us with the vices compared with our competitors increasing number of our Finnish clients latest information and ideas, which elsewhere in Europe. We can manage switched over to our international we can utilise in our own operations. the risks of our clients from under- insurance programmes, which enable Our international operations will writing and loss prevention right them to insure their risks across bor- surely be furthered by a Claims through to claims settlement. In ders without having to take out sev- Paying Ability Rating of A- from Western and Central Europe, few eral policies. Over 40 per cent of the Standard & Poor’s last year. A- repre- companies can offer this kind of com- premiums written by Major Accounts sents good security, and it was also prehensive service package. Service is Services come from overseas interests, given to Sampo, Otso, and Sampo the basis of our expertise and enables excluding statutory insurance Industrial Insurance. Such a rating is us to stand out from our competitors. schemes in Finland. This develop- particularly significant on the inter- 2 INDUSTRIAL INSURANCE ANNUAL REPORT 1997 national market, because many clients insure their risks only with rated insurance companies. Versatile Co-operation with Reinsurers As an insurer of major risks Industrial Insurance has established good and long-term relationships with the lead- ing reinsurance companies in the world. The co-operation is not re- stricted to the transfer of risks, but also covers such areas as product de- velopment, risk management, and loss prevention. Co-operation of this kind further enhances Industrial In- surance’s ability to provide even bet- ter services for its clients. During the past few years, several mergers have taken place within the field of reinsurance. As a result, the number of reinsurance companies has decreased but the companies are larg- er than before. However, this consol- Life and pension insurance ser- new client service model at the begin- idation has not had a major effect in vices are of particular importance to ning of 1997 was a challenge for our Industrial Insurance’s operations. Our our clients. The entry of Pension-Var- personnel, who deserve heartfelt risks are securely spread – now among ma and Nova into the Sampo co-oper- thanks for a job well done. reinsurance companies which are ation group clarifies its structures and As we face another year of fresh even more solvent and provide an enables close co-operation in the cre- challenges, I believe that our business even wider variety of products than ation of comprehensive services for operations will continue to develop in before. clients. a favourable way. We intend to main- The technical and legal problems tain our position on the domestic New Challenges, New Opportunities linked to the year 2000 are a great market and continue to advance in The tariffs for statutory accident in- challenge for risk management, both our extended domestic market. Our surance will be partially deregulated for us and for our client corporations. aim is to become the insurer of cor- in Finland from the beginning of Our aim is that communication, safe- porate risks that is particularly known 1999, when the amendments to the ty measures and insurance will to- for its professional expertise. relevant legislation come into force. gether create the best possible condi- For the clients of Industrial Insurance tions for our clients to manage risks March 1998 this means that a wider range of solu- attached to the millennium bug. tions and payment systems will be I wish to express my warmest available. As a consequence, the sta- thanks to our clients and partners for tus of occupational safety will be in- their confidence in us, and for their Juha Toivola creasingly emphasised. Our competent excellent co-operation during a year occupational safety resources and characterized by major changes in our services will remain at the disposal of operational environment. The initi- our clients in the future. ation of the Major Accounts Services’ INDUSTRIAL INSURANCE ANNUAL REPORT 1997 3 TOTAL RISK COSTS UNDER CONTROL Industrial Insurance and the Sampo Group Major Accounts Services (MAS) built around it is a risk management service unit rather than just a carrier of financial risks in enterprise activities. Service and know-how are of particular importance in the special profile MAS has. Know-how means the ability to find risk management solutions that secure performance and the balance sheet of our corporate clients, while at the same time keeping total risk costs under control. nsurance itself is only one of four tems that automatically note chan- the costs of different technical solu- Iinterdependent elements that de- ges in a company’s business activities. tions in relation to the estimated risk termine the total costs associated with Alternative risk financing solutions and benefits accruable from measures a risk: the others involve costs asso- are a complementary option in areas taken.