Notes to the Group’s financial statements

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15 Financial assets
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Group's financial assets comprise investments in derivatives, financial assets designated as at fair value through p/l, loans and receivables, available-for-sale financial assets and investments in subsidiaries. The Holding segment includes also investments in subsidiaries.

The Group uses derivative instruments for trading and for hedging purposes. The derivatives used are foreign exchange, interest rate and equity derivatives. In P&C insurance business, fair value hedging has been applied during the financial year. In Life insurance, both fair value and cash flow hedging have been applied.

EURm						2012	2011
P&C insurance
	Derivative financial instruments					49	114
	Financial assets designated as at fair value through p/l					22	155
	Loans and receivables					85	83
	Financial assets available-for-sale					11,045	10,402
	P&C insurance, total					11,200	10,754

Life insurance
	Derivative financial instruments					60	36
	Financial assets designated as at fair value through p/l					48	51
	Loans and receivables					23	23
	Financial assets available-for-sale					5,138	5,058
	Life insurance, total					5,269	5,168

Holding
	Derivative financial instruments					59	29
	Loans and receivables					1	1
	Financial assets available-for-sale					599	1,066
	Investments in subsidiaries					2,370	2,370
	Holding, total					3,028	3,465

Elimination items between segments						-2,641	-2,642

Group, total						16,857	16,745


P&C insurance

Derivative financial instruments
			2012			2011
			Fair value			Fair value
EURm		Contract/ notional amount	Assets	Liabilities	Contract/ notional amount	Assets	Liabilities
Derivatives held for trading
	Interest rate derivatives
	OTC derivatives
	Intrerest rate swaps	50	0	1	162	19	16

	Exchange traded derivatives
	Interest rate futures	163	2	-	393	0	-
	Total interest rate derivatives	213	2	1	555	19	16

	Foreign exchange derivatives
	OTC derivatives
	Currency forwards	2,173	37	36	11,749	94	185
	Currency options, bought and sold	-	-	-	211	2	2
	Total foreign exchange derivatives	2,173	37	36	11,961	95	186

	Equity derivatives
	OTC derivatives
	Equity and equity index options	0	0	-	0	0	-

Total derivatives held for trading		2,386	40	37	12,516	114	202

Derivatives held for hedging
	Fair value hedges
	Currency forwards	372	9	1	277	-	0

Total derivatives		2,759	49	38	12,793	114	202


Other financial assets

EURm						2012	2011
Financial assets designated as at fair value through p/l
	Debt securities
	Issued by public bodies					3	33
	Certificates of deposit issued by banks					16	89
	Other debt securities					1	33
	Total debt securities					19	155

	Equity securities
	Listed					2	0
	Unlisted					-	-
	Total					2	0

Total financial assets designated as at fair value through p/l						22	155

Loans and receivables
	Deposits with ceding undertakings					1	1
	Other					83	82
Total loans and receivables						85	83

Financial assets available-for-sale
	Debt securities
	Issued by public bodies					152	258
	Certificates of deposit issued by banks					3,729	2,967
	Other debt securities					5,794	5,888
	Total debt securities					9,675	9,113

	Equity securities
	Listed					1,240	1,145
	Unlisted					130	144
	Total					1,370	1,289

Total financial assets available-for-sale						11,045	10,402

Financial assets available-for-sale for P&C insurance include impairment losses EURm 323 (330).

P&C insurance, total financial assets						11,200	10,754


Life insurance

Derivative financial instruments
			2012			2011
			Fair value			Fair value
EURm		Contract/ notional amount	Assests	Liabilities	Contract/ notional amount	Assets	Liabilities
Derivatives held for trading
	Interest rate derivatives
	OTC derivatives
	Interest rate swaps	778	19	2	1,750	21	-
	Credit risk swaps	531	0	2	558	10	0
	Total	1,309	19	3	2,308	31	0

	Foreign exchange derivatives
	OTC derivatives
	Currency forwards	1,149	17	2	708	2	24
	Currency options, bought and sold	99	1	0	203	1	1
	Total foreign exchange derivatives	1,248	17	2	912	3	25

	Equity derivatives
	OTC derivatives
	Equity and equity index options	-	-	-	29	0	0

Total derivatives held for trading		2,556	37	5	3,248	35	25

Derivatives held for hedging
	Fair value hedges
	Currency forwards	575	23	-	430	-	38
	Interest rate swaps	-	-	-	33	-	1
	Total	575	23	-	463	0	38

	Cash flow hedges
	Interest rate swaps	9	0	-	47	2	-

Total derivatives held for hedging		584	23	-	510	2	38

Total derivatives		3,141	60	5	3,758	36	64

Fair value hedges

Fair value hedging is used to hedge a proportion of foreign exchange and interest risk in available-for-sale financial assets. The interest elements of forward contracts have been excluded from hedging relationships in foreign exchange hedges, as well as the share of credit risk in interest risk hedges.

Net result from exchange derivatives designated as fair value hedges amounted to EURm 12 (-11). Net result from hedged risks in fair value hedges of available for sale financial assets amounted to EURm -11 (11).

The hedge of interest rate risk was assessed ineffective during the first quarter and the hedge accounting was terminated. The hedging result EURm 1 will be amortised with the effective interest method during the remaining 3 years of maturity of the hedged bonds. In the comparison year, the net losses from interest rate swaps designated as fair value hedges amounted to EURm -2. The net gains from hedged risks in fair value hedges of available for sale financial assets amounted to EURm 2.

Cash flow hedges

Cash flow hedges have been used to hedge future interest payments resulting from floating rate interest-bearing assets. The hedged items designated are interest payments from EUR denominated bonds.The effectiveness of the hedging relationships is assessed prospectively using the critical terms match method. An effectiveness test is carried out retrospectively using the hypothetical swap method.

At 31 Dec. 2012, the total amount of gains recognised in equity from the changes in the fair values of hedging instruments was EURm 0 (2). These gains are recognised in the income statement at the time when the hedged items affect profit or loss. The table below represents the periods when the cash flows are expected to occur and when they are expected to affect profit or loss. Any ineffectiveness is recognised in the income statement.

Other financial assets

EURm						2012	2011
Financial assets designated as at fair value through p/l
	Debt securities
	Issued by public bodies					12	11
	Certificates of deposit issued by banks					35	39
	Total debt securities					47	50

	Listed equity securities					1	1

Total financial assets designated as at fair value through p/l						48	51

Loans and receivables
	Deposits with ceding undertakings					1	1
	Loans					22	22
Total loans and receivables						23	23

Financial assets available-for-sale
	Debt securities
	Issued by public bodies					12	11
	Issued by banks					1,066	1,150
	Other debt securities					1,708	1,671
	Total debt securities					2,786	2,832

	Equity securities
	Listed					1,561	1,451
	Unlisted					792	775
	Total					2,353	2,226

Total financial assets available-for-sale						5,138	5,058

Financial assets available-for-sale for life insurance include impairment losses EURm 29 (173).

Life insurance, total financial assets						5,269	5,168

Financial assets available for sale / debt securities: Debt securities available for sale include EURm 2,381 (2,494) investments in bonds and EURm 405 (338) investments in money market instruments.

Financial assets available for sale /shares and participations: Listed equity securities include EURm 589 (635) listed equities. Unlisted equity securities include EURm 752 (692) investments in capital trusts.


Holding

Derivative financial instruments
			2012			2011
			Fair value			Fair value
EURm		Contract/ notional amount	Assets	Liabilities	Contract/ notional amount	Assets	Liabilities
Derivatives held for trading

	Interest derivatives
	OTC-derivatives
	Interest rate swaps	800	42	-	1,050	16	-
	Credit risk swaps	20	1	-	20	0	-
	Total interest derivatives	820	43	-	1,070	16	-

	Equity derivatives
	Exchange traded derivatives
	Equity and euqity index options	90	16	19	80	13	17


Total derivatives		910	59	19	1,150	29	17


Other financial assets

EURm						2012	2011
Loans and receivables
	Deposits					1	1

Financial assets available-for-sale
	Debt securities
	Certificates of deposit issued by banks					100	809
	Other debt securities					475	223
	Total debt securities					575	1,032

	Equity securities
	Listed					1	-
	Unlisted					24	34
	Total					24	34

Total financial assets available-for-sale						599	1,066

Financial assets available-for-sale for Holding business include impairment losses EURm 0 (0).

Investments in subsidiaries						2,370	2,370

Holding, total financial assets						3,028	3,465

Elimination items between segments						-2,641	-2,642

EURm						2012	2011
Group, total						16,856	16,745

Notes to the Group’s financial statements

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