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P&C Insurance in 2012

If P&C is the leading property and casualty insurance group in the Nordic region, with insurance operations that also encompass the Baltic countries and Russia. The P&C insurance group’s parent company, If P&C Insurance Holding Ltd, is located in Sweden, and the If subsidiaries and branches provide insurance solutions and services in Finland, Sweden, Norway, Denmark, the Baltic countries and Russia. If’s operations are divided into four business areas: Private, Commercial, Industrial and Baltic. Danish insurance company Topdanmark is If's associated company.

P&C Insurance, 2012
EURm20122011Change, %
Premiums, net



Net income from investments




Other operating income 33  31
Claims incurred



Change in insurance liabilities



Staff costs



Other expenses expenses



Finance costs -19 


Share of associates' profit/loss



Profit before taxes






Combined ratio, % 89.3  92.0  -2.7 
Risk ratio, % 65.9  68.4  -2.5 
Cost ratio, % 23.3  23.5  -0.2 
Expense ratio, % 17.1  17.3  -0.2 
Return on equity, % 36.2  12.4  23.8 
Average number of staff (FTE) 6,225  6,299  -74 

Profit before taxes for P&C insurance increased by 35 per cent to EUR 858 million (636) in 2012 as a result of an excellent operating profitability during the year. Net income from investments also improved significantly compared to previous year, as the comparison period was burdened with impairment losses of EUR 152 million related to equity assets. In 2012 the impairment losses amounted to EUR 24 million.

Combined ratio for the year 2012 was 89.3 per cent (92.0), which is the best ever full year combined ratio in If P&C’s history. Also risk ratio improved significantly in 2012 to 65.9 per cent (68.4). The excellent outcome was supported by better than average weather conditions particularly during the first half of the year. EUR 133 million (135) was released from technical reserves relating to prior year claims.

Technical result increased to EUR 560 million (457) in 2012. Technical result for Private business area increased to EUR 349 million (256) and for Commercial to EUR 168 million (124). For business area Industrial technical result decreased to EUR 28 million (53), as large claims in the business area ended up worse than normalized mainly due to some significant single large claims in Sweden and Denmark in the second quarter of 2012. For Baltic operations technical result decreased to EUR 17 million (22). Insurance margin (technical result in relation to net premiums earned) improved to 12.8 per cent (11.1).

Return on equity (RoE) increased to 36.2 per cent (12.4). Fair value reserve for If P&C increased from the previous year to EUR 364 million (139) at the end of December 2012.

  Combined ratio,%    Risk ratio,%   
 20122011Change  20122011Change
Private 88.1  91.9 -3.8  64.9  68.5 -3.6 
Commercial 89.0  92.8 -3.8  65.5  69.1 -3.6 
Industrial 95.8  91.8 4.0  73.9  71.5 2.4 
Baltic 87.1  84.5 2.6  54.7  48.0 6.7 
Sweden 95.8  95.6 0.2  72.4  73.1 -0.7 
Norway 81.3  88.0 -6.7  59.1  65.9 -6.8 
Finland 89.5  94.0 -4.5  66.7  70.7 -4.0 
Denmark 99.4  93.4 6.0  71.7  63.9 7.8 

Both combined ratio and risk ratio improved significantly during 2012 in business areas Private and Commercial, to a large extent helped by the Norwegian operations, which reached an exceptionally good profitability in 2012 due to improved claims frequency, prior year claims result and benign weather conditions. Both combined and risk ratios decreased significantly also in Finland, despite the effect of lowering the discount rate for annuities in the third quarter.

Swedish operations remained on a previous year’s level in 2012 on both combined and risk ratios, despite the significant single large claims in business area Industrial in the second quarter of 2012. Denmark was burdened by worse than average large claims outcome.

Large claims in total ended up EUR 50 million higher than average for the full year 2012. Large claims development was favourable in business area Commercial but EUR 59 million worse than normalized in the business area Industrial. Discount rate for annuities (real rate) in Sweden increased to 0.18 percent at the end of 2012 from 0.07 per cent at the end of September 2012, which had a minor positive impact on the result.

All business areas had strong growth in 2012. Gross written premiums increased 6.4 per cent to EUR 4,698 million (4,414). Adjusted for currency, premiums increased 3.5 per cent. In Private gross written premiums adjusted for currency increased 3.3 per cent, in Commercial 2.6 per cent, in Industrial 3.7 per cent and in Baltic operations by one per cent.

Cost ratio improved from the previous year to 23.3 per cent (23.5) and expense ratio to 17.1 (17.3). Adjusted for currency the nominal costs increased 4.2 per cent.

Investment Allocation
If P&C, 31 December 2012

At the end of December 2012 the total investment assets of If P&C amounted to EUR 11.7 billion (11.2). Net income from investments increased to EUR 359 million (298). Investment return mark-to-market for the year 2012 was 6.1 per cent (1.8). Duration for interest bearing assets was 1.1 year (1.2) and average maturity 2.3 years (2.5). Fixed income running yield as at 31 December 2012 was 3.6 per cent (4.1).

If P&C’s solvency ratio as at 31 December 2012 (solvency capital in relation to net written premiums) was 77 per cent (72). Despite the dividend paid to Sampo plc in the fourth quarter, solvency capital increased from the previous year to EUR 3,485 million (3,080). Reserve ratios were 161 per cent (167) of net written premiums and 219 per cent (237) of claims paid.

Significant Events During 2012

On 30 June 2012 If P&C Insurance Holding Ltd entered into an agreement to sell its Russian subsidiary Region. The transaction was closed on 29 November 2012. If P&C continues to operate in Russia through a subsidiary that focuses on Nordic clients operating in the country.

On 5 November 2012 If P&C Insurance Company Ltd (Finland) signed an agreement to acquire the P&C insurance business of the Finnish branch of Tryg A/S for a consideration of EUR 15 million. Tryg’s Finnish branch had a premium income of EUR 84 million in 2011, approximately 155,000 customers and a market share of approximately two per cent. The acquisition is expected to have a minor positive impact on If P&C’s result in medium term. The transaction is subject to approval by the authorities and is expected to be completed during the spring of 2013.

In November 2012 If P&C and Nordea signed a partnership agreement whereby Nordea will market If P&C’s products in Finland, Sweden, Estonia, Latvia and Lithuania. The partnership will begin during the spring of 2013.

Associated Company Topdanmark

If P&C holds 22.9 per cent of the total number of shares and 25.4 per cent of all shares excluding the shares held by the company itself of Topdanmark which is listed in the Copenhagen Stock Exchange. Topdanmark is a P&C insurance company with a small exposure to life insurance in Denmark. In 2011 Topdanmark’s gross written premiums amounted to approx. EUR 1.6 billion. The company has a market share of 18 per cent in P&C insurance and 3 per cent in life insurance in Denmark.

Topdanmark has a profit distribution policy according which it does not pay dividends but buys back its own shares in the market. As If P&C has not participated in the buybacks, its holding as a percentage of all Topdanmark shares has grown. In May 2011 the holding exceeded 20 per cent and If P&C started to account for Topdanmark as an associated company.

In Sampo Group’s segment reporting Topdanmark holding is included in the P&C insurance segment. Due to the late publication of financial reports by Topdanmark, consensus estimate for the company’s net result is used for this purpose and any deviations in relation to subsequently published amounts will be included in the next quarterly report.

In Sampo Group’s 2012 accounts the contribution of Topdanmark’s net profit after the amortization of EUR 8 million amounted to EUR 50 million. If’s solvency capital on 31 December 2012 includes the proportion of Topdanmark’s solvency capital corresponding to If P&C’s holding.

On 31 December 2012 If P&C held 3,147,692 Topdanmark shares. The average acquisition price is DKK 780 and the book value in Sampo Group’s balance sheet on 31 December 2012 was EUR 111.75 (DKK 831). The closing price at the end of trading year 2012 in the Copenhagen Stock Exchange was DKK 1,213 (EUR 163) per share.