In 2012, Mandatum Life’s return on both equity and fixed-income investments was good, resulting in an exceptionally high overall return on investment assets. The high return on fixed-income investments largely results from a strong decline in interest rates and the narrower risk margins of corporate bonds. This creates significant challenges for investment activities during the next few years; 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, enabling it to reduce the return requirement on technical provisions for 2013 and 2014.
For core businesses, premiums written rose close to the record-high level of 2010, clearly exceeding that of 2011. The increase in premiums written was primarily due to the strongly increased 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 premiums written related to unit-linked contracts, and what was particularly positive about these channels was that redemptions related to unit-linked contracts remained at a substantially lower level than the year before. As a result of these, the unit-linked technical provisions rose to the highest level ever in the company’s history. The assets and customer numbers of the company’s own wealth management also experienced solid growth despite the challenging market and economic situation.
The pension insurance market was marked by heavy debate on the tax treatment of individual pension insurance policies and PS contracts. The outcome was to raise the minimum retirement age for new individual pension insurance policies and PS contracts concluded after 1 January 2013 to be in line with the maximum retirement age under the statutory pension system, which is currently 68 years. In Mandatum Life’s view, these changes will substantially weaken demand, which is why the company decided to discontinue all sales of individual pension insurance policies, after having previously ceased selling those products to private customers. The tax changes will, however, not eliminate the need for customers to make preparations for their retirement; to meet this need, the company will adjust both its product and service offering and its sales organisation to better reflect the new market situation in the beginning of 2013. In terms of wealth management and other savings solutions, this will entail a broader range of services and investment targets. Solutions related to life and health risks, along with commitment and rewarding services, will also play a greater role in the overall offering.
In the Baltics, premiums written for the full year fell short of the previous year’s level, even though demand and the market picked up towards year-end. However, thanks to lower surrender rates and higher investment returns, the company’s unit-linked technical provisions developed more favourably compared to 2011. During the year, the sales and customer service organizations were adjusted to better meet customer demand and needs.
A particular focus area of HR management in 2012 was the development of the competence of the sales and customer interface in investment products. Efforts to enhance the personnel’s other competencies and managerial work as well as personnel well-being were also continued. Based on these efforts, Mandatum Life was ranked 21st among Finland’s best workplaces (Great Place to Work Research 2012).