Suomi Mutual's Financial Statements Bulletin 2009

16 March 2010

High net investment income enables additional benefit distribution again

Suomi Mutual's return on investments was very good in 2009. A net investment income of 12.5% in 2009 easily covered losses of 4% in 2008. The company's result and much improved solvency enabled the distribution of over EUR 160 million in additional benefits to policyholders.

Suomi Mutual, which ceased to underwrite new businesses a few years ago, manages its insurance and investment portfolios for the benefit of its customers. The policyholders number some 250,000. The amount of benefits we have paid to our customers – with the exception of the global financial crisis year 2008 – has been high thanks to a good return of investments and because we have returned solvency capital to our policyholders. During 2005–10, we have paid out a total of almost EUR 1.2 billion in various additional benefits.

Our good result in 2009 enabled us to distribute a total of EUR 160 million in additional benefits. Most of this went – based on a previous conditional promise – as additional special benefits to our old policies, that is, those that had been taken out from us by 1 July 1997. Some EUR 100 million of the conditionally promised EUR 840 million remains to be paid.
 
The Group's solvency capital was EUR 1,267 million on 31 December 2009 (997) and the solvency ratio in proportion to technical provisions stood at 24.8% (19.9).

14% of Finns' insurance savings still with Suomi Mutual

Suomi Mutual's premiums written came to EUR 83 million (75), and the amount of claims paid totalled EUR 412 million (536).
14.0% (15.2) of Finns' insurance savings were managed by Suomi Mutual, with 20.5% of insurance savings based on technical interest. A policy based on technical interest entitles the customer to a certain minimum profit, whereas in a unit-linked option the risk for value performance is held by the customers with their investment choices. Suomi Mutual's insurance portfolio does not contain unit-linked policies.

The company's operating expenses totalled EUR 15 million (15) and the expense ratio stood at 100%.

Net investment income of 12.5%

On 31 December 2009, Suomi Mutual's investment portfolio at fair value came to EUR 6,410 million (6,004).

The net investment income of 12.5% translates to EUR 713 million at fair value. This was well above the company's technical provisions and the return on equity target. The previous year's net investment income was actually –4.0% (translating to a loss of EUR 267). If 2008 and 2009 are viewed as a whole, the combined annual net investment income is about 4%.

29 per cent (20) of the company's investments on 31 December 2009 were in shares and various equity and venture capital funds. Various interest-bearing instruments accounted for 57 per cent (63 per cent) and land and buildings for 10 per cent (11 per cent) of the portfolio. Real estate investments here also include investments in mutual funds and UCITS investing in real estate holdings. Alternative investments, or absolute return funds and commodity investments, accounted for 4% (5) of the company's investment assets. The equity risk was increased in 2009 by gradually reducing the level of equity derivative hedging.  At its lowest, the equities' risk-adjusted weight was a little under 10%, but on 31 December it was almost 32%.

Additional benefits worth over EUR 160 million

High net investment income enabled us to distribute more than EUR 160 million to our customers. A year ago during the global financial crisis we paid less than EUR 10 million in additional benefits, as we gave higher priority to ensuring our customers' insurance savings.

The total annual return on savings in 2009 for old policies rises at its highest to more than 12%, consisting of a 4.5% technical interest, 2.7% special benefit, 4.5% additional special benefit and 0.5% customer bonus. The additional benefit of old risk insurance policies includes a reduction of 30% on insurance premiums. The annual profit for other insurance savings in 2009 ranges from 4.5 to 5.0%, depending on the technical interest.  After the additional benefits that will be paid in 2010 for old policies, some EUR 100 million of the conditionally promised EUR 840 million of additional benefits remain to be paid.

Additional benefits and customer bonuses are decided upon on a yearly basis. Suomi Mutual's risk exposure is an important factor in this decision, and the customer bonus and additional special benefits may vary considerably from year to year.

SUOMI MUTUAL LIFE ASSURANCE COMPANY

Markku Vesterinen
President and CEO

APPENDIX Group financial performance (figures and ratios, analysis of financial result, solvency, net investment income, investment mix)

FOR FURTHER INFORMATION, PLEASE CONTACT:
Mr Markku Vesterinen, President and CEO, tel. +358 (0)10 253 2844 or +358 (0)50 348 3502
Mr Timo Hukka, Chief Investment Officer, tel. +358 (0)10 253 2002 or +358 (0)40 519 0510
Kai Niemi, Chief Financial Officer, tel. +358 (0)10 253 2803 or +358 (0)40 820 5927