PRESS RELEASE 20 AUG. 2009
Tapiola Group companies’ performance improved during the first half of the year:
- insurance companies’ and Tapiola Bank’s results showed a profit
- insurance companies’ solvency continued to be among the best in the industry
- insurance companies’ investment activities increased and
- insurance companies’ business volume grew.
The premium income of Tapiola Group non-life and life insurance grew in the review period. Tapiola Life group’s premium income increased by 5.7 percent to EUR 109.1 million (EUR 103.2 million). Tapiola General Group’s premium income increased by 5.7 per cent, to EUR 463.9 million (EUR 438.8 million).
Tapiola Bank continued to grow during the review period. The bank’s result showed a profit of EUR 1.0 million (EUR -2.8 million). Tapiola Asset Management increased its market share from 2.5 per cent at the turn of the year to 3.0 per cent at the end of June, and the number of unit holders grew in the first half of the year by 5,798 to approximately 40,000 owners.
Review by the President
“Tapiola Group's good performance was due to growth in the non-life insurance premium income, decrease in claims incurred, and profitable investment activities. Also, the focus on costs as well as pricing that better matches the risks have started to bear fruit as planned,” says Tapiola Group's President Asmo Kalpala.
Tapiola General’s claims incurred decreased, because the number of major claims was down by EUR 7.5 million compared to last year's corresponding period. The development has been particularly good in the corporate customer segment.
“The development of the real economy, i.e., employment, housing and consumption, will have an effect on our performance during the second half of the year. Despite the uncertain economic situation, we are expecting growth to continue also during the remainder of the year. The companies’ strong solvency gives us means for the long-term development of our group,” Kalpala says.
Investments
The investment income of Tapiola General and Tapiola life insurance companies increased during the period 1 January to 30 June 2009.
The six-month return on investments at current value achieved by the parent company of Tapiola General was 1.9 per cent (-2.6%). Net investment income at current value was EUR 49.2 million (EUR -70.0 million). Investment assets at current value stood at EUR 2,549.7 million (EUR 2,444.2 million 12/2008).
The six-month return on investments at current value achieved by the parent company of Tapiola Life was 2.2 per cent (-1.8%). Net investment income at current value amounted to EUR 37.2 million (EUR -31.1 million).
Investment assets at current value stood at EUR 1,731.1 million (EUR 1,745.1 million 12/2008). Equities yielded the best return.
The six-month return on investments at current value achieved by Tapiola Corporate Life was 2.0 per cent (-2.0%). Net investment income at current value was EUR 16.6 million (EUR -16.3 million). Investment assets at current value stood at EUR 835.6 million (EUR 831.9 million 12/2008).
Results
Non-life insurance
The result of Tapiola General Group’s insurance business came to EUR 3.1 million (EUR -57.9 million). The figure includes a non-recurring item of EUR 22.5 that diminishes the result. Last year’s figure for the comparable period is EUR 25.6 million. The non-recurring item was used to prepare for the possibility that claims under statutory motor liability and accident insurance increase in the near future. The Group’s overall result, i.e., operating profit and the change in the difference between current and book value of investments, totalled EUR 11.9 million (EUR -134.8 million). The change in the difference between current and book values improved the result by EUR 8.8 million (weakened by -EUR 77.0 million).
Tapiola General Group’s premium income increased by 5.7 per cent to EUR 463.9 million (EUR 438.8 million). The company’s direct business premium income increased by 5.3 per cent to EUR 420 million (EUR 398.7 million).
Tapiola General Group’s combined ratio before unwinding of discount expense in the insurance business was 109.2 percent (118.4%). Last year’s figure for the comparable period is 102.0 percent, which does not take into account the above-mentioned non-recurring item.
Tapiola General’s non-life insurance business’s solvency capital, which measures solvency and describes risk bearing capacity, totalled EUR 1,180.8 million (EUR 1,175.3 million 12/2008).
The solvency ratio (solvency capital in relation to premiums earned) was 183.5 per cent (189.3% 12/2008) at the end of the review period.
According to the Managing Director of Tapiola General Juha-Pekka Halmeenmäki, the economic recession creates pressures for keeping the growth of operating expenses and of these, particularly IT and personnel costs, at a low level also in the future. “This further underscores the importance improving the efficiency of operations, a process which the company has begun.”
Life Insurance
Tapiola Life Group’s premium income increased by 5.7 per cent to EUR 109.1 million (EUR 103.2 million).
Life insurance income increased by 10.4 per cent to EUR 61.4 million (EUR 55.6 million). Growth focussed, in particular, on unit-linked life insurance policies, which grew by 18.4 per cent, and on group life insurance, which grew by 16.3 per cent. Pension insurance income remained at the previous year’s level.
Tapiola Life Group’s operating profit rose to EUR 31.0 million (EUR -2.2 million). Change in the difference between current and book value weakened the result by EUR 3.7 million (EUR -109.8 million). The overall result was EUR 27.3 million (EUR -112.0
million).
Tapiola Life Group’s solvency capital was EUR 349.9 million (EUR 335.2 million 12/2008). The solvency ratio was 15.5 per cent (14.8% 12/2008) at the end of the financial year.
On 31 December 2009, Tapiola Group's life insurance operations will consist of one single mutual insurance company serving private and corporate customers. On that date, Tapiola Corporate Life Insurance Ltd will merge with its parent company Tapiola Mutual Life Assurance Company.
“The merger will increase operational efficiency by simplifying the company structure and eliminating overlapping costs, as well as by combining products and services," explains Tapiola Life's Managing Director Minna Kohmo.
According to Kohmo, the aging of the population and preparing for it is one of the most significant challenges for the society in the near future. “We are responding to our customers’ needs by offering a full range of products for preparing for retirement. We believe that, in particular, individual pension insurance will continue to be important in the future,” says Kohmo.
Banking and Investment Services
The number of the bank’s customers increased during the first half of the year by 13,527 to 172,667 customers. The number of account customers grew by 10,166 to 143,936 customers.
Tapiola Bank’s profit totalled EUR 1.0 million (EUR 0.3 million). The bank’s balance sheet continued to show a deposit surplus.
According to Tapiola Bank’s Managing Director Harri Lauslahti, the bank’s credit portfolio is expected to continue to grow by the end of the year, although the sector’s growth prospects in general are slower than in the previous years. “The bank’s position has been ensured with sufficient financial buffers, also in the event that the instability in the international money markets continues. The result for 2009 is expected to show a profit. The amount of profit will be modest in line with the state of the macro economy,” says Lauslahti.
Tapiola Asset Management recorded an operating loss of EUR -0.5 million (EUR -0.5 million).
Tapiola Asset Management’s market share increased from 2.5 per cent at the turn of the year to 3.0 per cent at the end of June and, measured by fund capital, the company was the eighth largest (7th largest) fund management company in Finland. The number of unit holders increased by 5,798 to 39,899 owners during the first half of the year.
In April, Tapiola started private banking operations, which means managing the assets of wealthy private customers by using various investment instruments. “The rather strong movements in the markets have increased the demand for various asset management services. In particular, the need to be actively involved in the allocation between various asset classes has increased due to the strong fluctuation of the values of different asset classes,” says Managing Director of Tapiola Asset Management Tom Liljeström.
The customer funds managed by the Bank Group totalled EUR 6,366.4 million (EUR 6,069.0 million 12/2008) at the end of the review period. Of this amount, the Bank Group’s deposit base was EUR 1,157.2 million (EUR 1,189.5 million 12/2008) and customer funds managed by Asset Management EUR 5,209.2 million (EUR 4,879.5 million 12/2008). Of these, the total fund capital in the funds managed by Tapiola Asset Management increased during the first half of the year by EUR 324.8 million to EUR 1,350.8 million. Of this, the share of net subscriptions in the funds accounted for EUR 220.4 million and the remainder of the fund capital growth was due to the increase in the value of investments.
Tapiola General Group’s operating losses for banking and investment operations stood at EUR 0.7 million (EUR -0.5 million). The result of the bank and mutual fund operations was strained by investments made in IT systems that develop the services.
Real estate business
The operating profit of Tapiola Real Estate came to EUR 0.1 million, whereas in the corresponding period last year it was EUR 0.2 million. The company’s turnover increased to EUR 3.6 million (EUR 3.3 million). The market value of the real estate property managed by the company increased to EUR 2,247.4 million (EUR 2,169.5 million 12/2008). The number of customers increased as planned during the half-year period.
The strong internationalisation of the Finnish real estate markets and the continuing structural change have increased both the demand for and supply of services. According to Vesa Immonen, Managing Director, these factors create a positive outlook for Tapiola Real Estate.
“We expect our business to develop favourably and according to plan. Our goals include increasing the customer base and turnover and improving our profitability during 2009,” says Immonen.
Further Information
Markku Paakkanen
Director of Financial and Data Management
Tel. +358 (0)9 453 2500