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Notes to the Group’s financial statements

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