Suomi-yhtiö

Extremely good performance allowed Suomi Mutual to again distribute additional benefits

The return on Suomi Mutual Life Assurance Company’s (Suomi Mutual) investment operations in 2009 was extremely good (12.5 per cent). The return was more than enough to cover the investment losses incurred by Suomi Mutual during the crisis year of 2008. The good performance and substantial improvements in the company’s solvency position allowed it to grant policyholders more than EUR 160 million in additional benefits. The overall annual return of the old insurance policy savings may exceed 12 per cent. The company distributed almost EUR 1.2 billion in different types of additional benefit to its customers in the period 2005−2010.

The company ceased to underwrite new insurance at the beginning of 2005. Its main task is to manage its insurance and investment portfolios for the benefit of its customers. As part of its strategy, the company only takes investment risks in a managed fashion so that it can meet its customers’ long term return targets. Solvency is kept at adequate levels so that the returns on customers’ savings can be maximised.

There will be a gradual decrease in the company’s insurance portfolio. Suomi Mutual still has about 250,000 policyholders and as the insurance portfolio shrinks, the need for solvency capital will slowly decline. As a mutual company, Suomi Mutual distributes freed up solvency capital to its policyholders as additional benefits. Apart from the year 2008, when the world economy was in a crisis, substantial sums have been distributed to customers as additional benefits. This has been due to the return of the solvency capital and high investment returns.

In 2005, the company published the principles for as even a return of solvency capital as possible. Most of the refunds have been given to what are called old insurance policies (policies that were in effect on 1 July 1997). This is because a total of EUR 840 million has been conditionally declared as part of these policies. Because of its good solvency level, the company has also been able to provide other policyholders with similar refunds since 2006. The additional benefits for 2009 will be paid during 2010. After these payments, about EUR 100 million of the sum, conditionally promised to old insurance policies, remains to be distributed.

In 2009, the overall annual return of old insurance policy savings may exceed 12 per cent (which includes a technical interest of 4.5 per cent, a special benefit of 2.7 per cent, a special additional benefit of 4.5 per cent and a customer bonus of 0.5 per cent). Old risk insurance policies include a 30 per cent reduction in premiums as additional benefit. The annual return on other insurance savings in 2009 is between 4.5 and 5.0 per cent, depending on the level of technical interest.

The decisions on special additional benefits and customer bonuses are made each year. The decisions depend on the company’s risk position. For this reason, there may be substantial differences in the levels of customer bonuses and special additional benefits granted each year.

At the end of 2009, the consolidated solvency capital stood at EUR 1 267 million (compared with EUR 997 million a year earlier). The solvency ratio in proportion to technical provisions was 24.8 per cent (19.9 per cent).

Return on investments 12.5 per cent

Suomi Mutual’s investment portfolio at fair value totalled EUR 6 410 million (EUR 6 004 million) at the end of the financial year.

The return on the company’s investments (12.5 per cent) amounted to EUR 713 million (at fair value). The investment return was well in excess of the return target, which is derived from the targets set for the company’s technical provisions and the return on capital. In 2008, the figure had been -4.0 per cent (EUR -267 million).

The company was only moderately affected by the financial crisis. The annual overall return for 2008 and 2009 was about four per cent (at fair value). Risks were reduced in 2008 and were gradually increased in 2009. The measures were successful and the company’s performance can be considered extremely good, both in view of the market developments and the situation as a whole.

Suomi Mutual managed 14 per cent of Finnish insurance savings

Suomi Mutual’s insurance premium income was EUR 83 million (EUR 75 million). Claims paid totalled EUR 412 million (EUR 536 million).

A total of 14.0 per cent (15.2 per cent) of all Finnish insurance savings were managed by Suomi Mutual. In insurance savings based on technical interest the share was 20.5 per cent. An insurance policy based on technical interest entitles the customer to a minimum return, whereas in a unit-linked policy, the risk regarding the return depends on the investment choices made by the customer. There are no unit-linked insurance policies in Suomi Mutual’s insurance portfolio.

The company’s operating expenses totalled EUR 15 million (EUR 15 million). The expense ratio was 100 per cent.

Most functions outsourced, small staff

At the end of the financial year Suomi Mutual employed 11 people (11), all working for the parent company.

Suomi Mutual has outsourced most of the management of its insurance and investment portfolios to the OP-Pohjola Group. The duty of the company is to ensure that the financial and qualitative requirements set out for the outsourced operations are met.

Our insurance clients are looked after by OP Life Assurance Company Ltd. Suomi Mutual’s customers’ dedicated service telephone numbers are 010 253 6110 (Finnish) and 010 253 6111 (Swedish).

Corporate social responsibility

Suomi Mutual provides financial security for its customers and their close relations. The policyholders supplement their statutory social security in the company and save in a secure and productive way.

The company has published its ownership policy on its website www.suomi-yhtio.fi.

Award for life-time achievement in medicine

It is only natural for a life assurance company to support activities that promote health and safety.

Together with the OP-Pohjola Group, Suomi Mutual makes awards annually for significant lifetime achievements by Finnish doctors. The Pohjola Insurance and Suomi Mutual Medical Award was first given in 1981. In 2009, the prize went to Hilkka Soininen, a professor of neurology, for her valuable long-term work on dementia and Alzheimer’s disease. As part of her work she has examined the causes of the diseases and helped to develop treatments for them. This year’s award went to professor of medicine Jussi Huttunen in recognition of his extensive contribution to the development of Finland’s medical care and the promotion of public health. The award ceremony was held in connection with the Finnish Medical Convention in January 2010. The prize sum is EUR 20,000.

Suomi Mutual has supported the promotion of safety in water and life-saving work since the 1950s. As in previous years, the company and the Finnish Association for Swimming Instruction and Life Saving donated lifebelts for bathing beaches.

Art on display

Suomi Mutual is a founder member of the Association of Finnish Fine Arts Foundations (STSY) established in 2006, which promotes familiarity with art and artistic endeavour as well as research into art history and preserves Finnish cultural heritage.

In May 2009, Two Faces of the Modern, an exhibition displaying art from the 1920s and 1930s was opened in the Amos Anderson Art Museum in Helsinki. The exhibition will remain open until autumn 2010. In October 2009, the exhibition Bilder från Finland – land och folk was opened in Prins Eugens Waldemarsudde art museum in Stockholm. The exhibition was part of the official events organised by Finland and Sweden in commemoration of the separation of Finland from Sweden in 1809. STSY has published books in connection with different exhibitions and has also donated them to libraries.

Further information about the Association can be found on its web pages http://www.stsy.fi/english/esittely.htm.