Mandatum Life Group’s result before taxes for January–June 2017 was EUR 116 million (103). Comprehensive income after taxes, taking into account changes in market values, more than doubled to EUR 111 million (44).
The return on equity was 15.6 per cent (6.5). The expense result grew to EUR 13 million (9) and the risk result to EUR 15 million (11). Premiums written on Mandatum Life Group’s own account decreased to EUR 423 million (492) during the first half of the year.
The fair value reserve grew to EUR 613 million (596) in January–June. The net return on investment assets, excluding the return related to unit-linked insurance, amounted to EUR 256 million (156). Income from unit-linked insurance amounted to EUR 262 million (-75).
Measured at market values, Mandatum Life Group’s investment assets totalled EUR 6.7 billion (6.5), excluding the EUR 6.8 billion (6.5) in assets covering unit-linked technical provisions. The investment assets covering Mandatum Life’s original with-profit liabilities on 30 June 2017 totalled EUR 5.4 billion (5.4) at market values. The return on investments at fair values was 4.6 per cent (1.5). The value of investments covering the segregated group pension insurance portfolio was EUR 1.1 billion (1.2), and the return on the segregated portfolio’s investments at fair values was 0.9 per cent (1.7) in January–June 2017.
Mandatum Life Group’s total technical reserves amounted to EUR 11.5 billion (11.3) on 30 June 2017. At the end of the first half of the year, the with-profit technical reserves amounted to EUR 4.8 billion (4.8). The insurance portfolios with a high technical rate of interest (4.5 and 3.5 per cent) shrunk by EUR 111 million to EUR 2.8 billion in January–June. The unit-linked technical provisions increased to EUR 6.7 billion (6.4) in the first half of 2017 and accounted for 57 per cent (56) of the total technical provisions.
Mandatum Life has strengthened its technical reserves by altogether EUR 358 million (273) in response to the low interest rate level. The figures do not include items related to the segregated portfolio. The discount rate for 2017, 2018 and 2019 is 0.25 per cent, and for 2020 it is 1.00 per cent. The technical rate of interest on the segregated group pension insurance portfolio is 0.50 per cent.
Valuation of insurance portfolio to be sold finalised
Mandatum Life Insurance Company Limited announced on 27 October 2016 that it would exercise its right to sell the insurance portfolio sold through Danske Bank's branch network in Finland to Danske Bank or to a party designated by it. On 19 June 2017, the valuation of the insurance portfolio to be sold was finalised, and as of 31 December 2016, the portfolio was valued at EUR 334 million.
Mandatum Life and Danske Bank have agreed that the theoretical result from the beginning of 2017 until the date of the transfer as determined in the valuation process will be deducted from the final sales price. The theoretical result for 2017 was determined to be EUR 18.1 million and for 2018 EUR 18.6 million. The actual result produced by the portfolio until the transfer remains with Mandatum Life. The transitional agency agreement between Mandatum Life and Danske Bank will continue until closing.
Once the transfer is completed, the transaction is expected to have a negative impact of EUR 20–25 million on Mandatum Life’s annual profit before taxes. The portfolio transfer is expected to take place during 2018. The transaction will have a positive impact on Mandatum Life’s solvency position.
The portfolio transfer mainly concerns only insurance policies sold to Danske Bank’s private customers. The transfer is subject to regulatory approvals, and does not require any actions on the part of the customers concerned.
Key figures H1/2017
Premiums written, own account: €423 million (492)
Profit before taxes: €116 million (103)
RoE: 15.6% (6.5)
Solvency ratio: 205% (12/2016: 160)
Return on investments: 4.6% (1.5) and on the segregated portfolio 0.9% (1.7)
Average number of staff: 528 (541)
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