Performance of Suomi Mutual remained good

The consolidated operating profit of the Suomi Mutual group for the first six months of the current year totalled EUR 203 million. The consolidated figure for the corresponding period a year earlier showed a profit of EUR 192 million. For the entire financial year 2003, the operating profit was EUR 418 million.

Consolidated net investment income for the first half of 2004 amounted to EUR 330 million, which is EUR 31 million more than the corresponding figure a year earlier.

Consolidated premiums written in the first half-year 2004 came to EUR 163 million, i.e. a decrease of EUR 1 million from the corresponding period in 2003. Premiums written for the whole of 2003 totalled EUR 378 million.

The underwriting of new business was a disappointment, which was, at least to some extent, a result of uncertainty related to the future tax treatment of voluntary pension insurance schemes.

The company's market share of premiums written for domestic life and pension insurance decreased from 10.9 per cent to 10.5 per cent. At the end of June, Suomi Mutual had 21.3 per cent of Finnish citizens' insurance savings under its management. A year earlier, the corresponding figure was 22.6 per cent.

Consolidated solvency capital at end-June 2004 totalled EUR 875 million. At the end of 2003, the figure was EUR 820 million. The solvency ratio, proportioned to the technical provisions, was 15.5 per cent, which is 1 percentage point higher than at the end of 2003.

In the first half of 2004, consolidated operating expenses stood at EUR 31 million, which is EUR 1 million more than the corresponding figure a year earlier. Operating expenses for the entire year 2003 totalled EUR 62 million. 

Successful investment operations

At the end of June, the investment portfolio of the Suomi Mutual group, at current values, amounted to EUR 6 424 million.

The proportion of shares in the consolidated investment portfolio was 26.3 per cent. Of all investments, the proportion of fixed-income securities and debt securities was 66.1 per cent and the proportion of investments in land and buildings 6.7 per cent. The housing sales, which were practically brought to an end in the first half of the year, lowered the proportion of investments in land and buildings.

The investment operations of Suomi Mutual aim at securing customers' savings and at generating a competitive yield on the savings. A substantial portion of Suomi Mutual's investment portfolio has always consisted of shares. Therefore, the upswing of share prices in 2003 markedly improved Suomi Mutual's performance in investment operations. In the first half of 2004, return on investments at current values was 4.4 per cent, which can be considered a very good result.

Implementation of new operational model underway

In early 2004, Suomi Mutual and Pohjola signed an agreement on a new operational model. Accordingly, Suomi Mutual will cease underwriting new business by the end of 2004. The sales of new policies will be transferred to Pohjola. On the basis of the agreement, an insurance portfolio of around EUR 1 billion, measured by technical provisions, will, on January 1, 2005, be transferred from Suomi Mutual to Pohjola. In the future, Suomi Mutual will be responsible for the management of the remaining insurance portfolio of over EUR 4.5 billion, measured by technical provisions. The company's investment portfolio will be worth almost EUR 5.5 billion. The new operational model has been approved by all administrative bodies of both companies. Owing to the portfolio transfer, the final implementation of the operational model will still require regulatory approvals of the authorities.

The implementation of the operational model has proceeded as planned. A majority of Suomi Mutual's current staff will transfer to Pohjola at the coming turn of the year. In the future, Suomi Mutual will purchase insurance management services from Pohjola. Around 15 employees will remain in the service of Suomi Mutual. No measures are required from customers because of the portfolio transfer. The insurance policies transferring to Pohjola will continue to be valid on current conditions. 

FOR MORE INFORMATION, please call

Mr Eino Halonen, President and CEO, tel. +358 10 559 2000
Mr Markku Vesterinen, Senior Executive Vice President, tel. +358 10 559 2844

The parent company of the Suomi Mutual group is Suomi Mutual Life Assurance Company (Suomi Mutual). The Group includes subsidiaries transacting life insurance in Poland, Estonia, Latvia and Lithuania.