Mandatum Life posts excellent premium income


Despite the turmoil caused by the debt crisis in the euro zone, 2012 proved in many ways to be a good year for Mandatum Life. After a difficult year in 2011, the company's investment result was excellent. Premium income also developed favourably compared to the previous year.

The profit before taxes for life insurance operations remained at the previous year's level in 2012 and was EUR 136 million (137). The comprehensive income of life insurance operations, taking into account market value changes, stood at EUR 286 million (-115), reflecting the success of the investment operations. The expense result declined during the year to EUR 6 million (10). The increase in the sales payroll and the granting of performance-based pay in response to good sales success raised costs. The risk result settled to EUR 19 million (25) from the exceptionally high level of the previous year.

In 2012, Mandatum Life's return on both equity and fixed-income investments was good, resulting in an exceptionally high overall return level on investment assets, at 9.4 per cent (-1.4). The high return on fixed-income investments is largely the result of the strong decline in interest rates and the narrower risk margins of corporate bonds. This will create considerable challenges for the company's investment activities in the near future. Due to the exceptionally low interest rate level, maturing fixed-income investments present a considerable re-investment risk. For this reason, the company continued to supplement the reserves for lowering the discount rate, which will help prepare for the costs stemming from the technical interest rate that will be credited to insurance in the future.

Mandatum Life's premium income reached its second-highest level in history, and premium income on the company's own account was EUR 977 million (849), with unit-linked policies accounting for EUR 810 million (649). Premium income from the Baltic countries amounted to EUR 33 million (41). Mandatum Life's market share in unit-linked insurance was 26.2 per cent (26.8), and the overall market share of direct business in Finland was 24.5 per cent (24.9). The company's market share in the Baltics dropped to 11 (15) per cent.

Mandatum Life Group's technical provisions increased to EUR 7,904 million (7,303). The technical provisions of unit-linked policies grew in the amount of EUR 779 million and at the turn of the year reached a historical high of EUR 3,833 million. The unit-linked technical provisions were boosted by the roughly 8 per cent investment return clients received on their savings. Technical provisions related to with-profit policies declined to EUR 4,071 million (4,248). The technical provisions include a reserve of EUR 118 million for decreased discount rates and some EUR 150 million in technical rate of interest and customer bonuses credited to insurance savings in 2012. Compensation paid to customers amounted to more than EUR 700 million, of which pensions accounted for roughly EUR 320 million, paid out to some 61,000 pension recipients. A total of close to EUR 400 million in other indemnities were paid to some 37,000 insured.

Mandatum Life Group's solvency capital amounted to EUR 1,391 million (1,049), which is more than 6 times the minimum requirements of the Solvency I regulations. The solvency ratio rose to 27.7 per cent (20.9). Due to the low interest rate level, the company's adjusted solvency capital is lower than the Sampo Group's target level for economic capital.

The pension insurance market was marked by heavy debate on the tax treatment of individual pension insurance policies and PS contracts. The minimum retirement age for new individual pension insurance policies and PS contracts concluded after 1 January 2013 was raised in line with the maximum retirement age under the statutory pension system, which is currently 68 years. In Mandatum Life's view, these changes substantially weaken demand, which is why the company decided to discontinue all sales of individual pension insurance policies to corporate customers. Sales of these products to private customers were discontinued earlier already. Changes in taxation will not affect pension insurance policies that begin in 2013.

Statement by CEO Petri Niemisvirta:
"In a challenging environment, we succeeded in generating a good result, and with premium income back on a growth trajectory, we can consider the year successful in more ways than one. The increase in premium income was primarily due to the robust sales volumes of the Danske Bank distribution channel, which reached an all-time high in the history of the distribution co-operation. Other sales channels also managed to increase the premium income related to unit-linked contracts, and what was particularly positive was that redemptions related to unit-linked contracts remained at a substantially lower level than the year before.

I consider the taxation policies that apply to new pension insurance policies to be very negative. The changes have not eliminated customers' need to prepare for their retirement, even in terms of voluntary savings. We were no longer interested in continuing to sell individual pension insurance, because in our view, the increase in the lower age limit for retirement to 68 that applies to new insurance policies substantially decreases demand for the product. In future, in terms of pension insurance, we will focus on group pension and we will aim to uphold the contribution loyalty towards pension insurance policies that began before 2013, so that we can ensure the most comprehensive pension cover possible for those customers. In 2012, EUR 320 million in pensions were paid to 61,000 insured, which is a significant amount, but going forward, I would prefer to see Mandatum Life as an even more significant provider of security to supplement statutory pension cover – through pension insurance and through other forms of savings."

Key figures 2012
Premiums written, own account: EUR 977 million (849)
Profit before taxes: EUR 136 million (137)
Return on equity: 28.5% (-11.7)
Expense ratio: 113.9% (109.1)
Solvency ratio: 27.7% (20.9)
Return on investments: 9.4% (-1.4)
Average number of staff: 545 (521)

For a full and detailed account of Mandatum Life's result, please see:

For more information, please contact:
Petri Niemisvirta, CEO:, tel. +358 (0) 10 516 7200
Jukka Kurki, CFO:, tel. +358 (0) 50 424 6630
Niina Riihelä, Vice President, Marketing and Communications:, tel. +358 (0) 40 728 1548