PRESS RELEASE 19 AUGUST 2010
Tapiola Group companies’ performance improved during the first half of the year (1 Jan–30 Jun 2010):
- Tapiola General Group’s overall result in the non-life insurance business increased by EUR 37.2 million to EUR 49.1 million (EUR 11.9 million). The company’s premium income increased by 2.2 per cent to EUR 474.1 million (EUR 463.9 million).
- The overall result of Tapiola Life rose by EUR 10.4 million to EUR 40.2 million (EUR 29.8 million). Premium income grew by 10.0 per cent to EUR 120.0 million (EUR 109.1 million).
- The number of Tapiola Bank’s customers continued to increase during the early part of the year, rising by 15,742 to 200,143 customers. The customer funds managed by the Bank Group increased to EUR 7,146.4 million (EUR 6,835.9 million 12/2009) by the end of June.
- Customer funds managed by Tapiola Asset Management rose to EUR 5,735.8 million at the end of the review period (EUR 5,564.0 million 12/2009). The fund capital and the number of unit holders in mutual funds managed by Tapiola Asset Management increased as well.
- The turnover of Tapiola Real Estate rose to EUR 4.4 million (EUR 3.6 million) and operating profit to EUR 0.2 million (EUR 0.1 million).
Review by the President
“In the first half of the year, Tapiola Group continued its steady, profitable growth in all areas of its operations. Risks associated with the operating environment and due to the financial crisis throw a shadow over the future prospects of the sector. However, Tapiola’s risk management has been developed and its solvency position has been taken care of in line with the requirements of the operating environment. Tapiola will continue to actively develop its operations in order to strengthen the position of its customers in the Finnish financial market,” says Tapiola Group's President Asmo Kalpala.
Results
Tapiola General, Non-Life Insurance
Tapiola General Group’s operating profit in the non-life insurance business grew to EUR 13.6 million (EUR 3.1 million). The change in the current and book values improved the insurance business overall result by EUR 35.5 million (EUR 8.8 million). Tapiola General Group’s overall result in the non-life insurance business, i.e., operating profit and the change in the difference between current and book value of investments, totalled EUR 49.1 million (EUR 11.9 million).
Net investment income at current value achieved by Tapiola General in the review period was 2.9 per cent (1.9%). Net investment income at current value was EUR 79.6 million (EUR 49.2 million). Investment assets at current value stood at EUR 2,724.3 million (EUR 2,616.9 million 12/2009).
Tapiola General’s premium income increased by 2.2 per cent to EUR 474.1 million (EUR 463.9 million). Direct business (underwritten) premium income increased by 2.3 per cent to EUR 429.6 million (EUR 420.0 million).
“The growth of our premium income in the first half of the year clearly exceeded the growth of the sector. However, growth at Tapiola General and in the whole sector was lower than the long-term average. This is due to the economic recession and its effect especially on the premium income of statutory accident insurance,” comments Juha-Pekka Halmeenmäki, Managing Director of Tapiola General.
Tapiola General Group’s combined ratio before unwinding of discount expense in the non-life insurance business was 107.2 per cent (102.2%). Risk ratio stood at 74.3 per cent (69.2%) and operating expenses ratio at 32.9 per cent (32.9%). The collective provision included in the liability for damages of statutory accident and motor liability insurances were supplemented in 2009. The comparable figures can be found above.
“Due to the exceptionally harsh winter especially in the Helsinki area, extensive fire damage and the ash cloud, claims incurred increased to a level slightly higher than long-term expectations. Nevertheless, the outcome in the early part of the year can be considered normal and the negative development compared to the reference period is mainly explained by the exceptionally favourable claims experience of 2009. Furthermore, the storms that raged at the end of the summer have caused an extremely high number of claims in many different insurance classes. It is too early to estimate the exact amounts in euros. However, it is already certain that, in 2010, claims expenditure will clearly exceed the normal level,” says Halmeenmäki.
Tapiola General’s solvency capital was EUR 1,361.4 million (EUR 1,317.0 million 12/2009). The solvency ratio was 208.6 per cent (203.6% 12/2009) at the end of the review period. The solvency position of Tapiola General can be considered very strong within the sector.
Tapiola General, Banking and Investment Services
Tapiola General Group’s operating profit for banking and investment services stood at EUR 0.4 million (EUR -0.7 million). The interest margin grew by 19.5 per cent to EUR 6.8 million (EUR 5.7 million). Net commission income was EUR 7.1 million (EUR 5.1 million), rising 39.5 per cent year-over-year.
The number of Tapiola Bank’s customers continued to increase during the early part of the year, rising by 15,742 to 200,143 customers (184,401 12/2009). The number of account customers grew by 7,118 to about 158,950 customers (151,832 12/2009).
The operating profit of Tapiola Bank Ltd in the review period was EUR 1.2 million (EUR 1.0 million). The customer funds managed by the Bank Group totalled EUR 7,146.4 million (EUR 6,835.9 million) at the end of June.
“The result of the early part of the year corresponded to long-term forecasts,” says Harri Lauslahti, Tapiola Bank's Managing Director.
The fund capital in the mutual funds managed by Tapiola Asset Management Company increased to EUR 1,645.4 million (EUR 1,594.2 million 12/2009) during the early part of the year. The company’s market share of funds remained at the same level as at the end of 2009, standing at 2.9 per cent.
Tapiola’s funds gained nearly 3,000 new unit holders during the early part of the year, which increased the number of unit holders to nearly 47,761 (44,834 12/2009).
Customer funds managed by Tapiola Asset Management rose to EUR 5,735.8 million at the end of the review period (EUR 5,564.0 million 12/2009).
According to Tom Liljeström, Managing Director, increasing uncertainty due to the economy has characterised the asset management market since late spring. This has resulted in mutual fund redemptions, and the mutual fund market has shrunk towards the summer. “We believe that our growth will continue as we offer solutions that are based on our own analysis and can be used to manage uncertainty as regards investments in the best possible way,” states Liljeström.
Tapiola Life
Tapiola Life’s overall result increased to EUR 40.2 million (EUR 29.8 million). The company’s operating profit was EUR 15.1 million (EUR 33.6 million). Premium income increased by 10.0 per cent to EUR 120.0 million (EUR 109.1 million). Without capital redemption contracts and employee group life insurance agreed through a pooling contract, Tapiola Life’s premium income increased by 6.7 per cent.
According to Minna Kohmo, Managing Director, Tapiola Life increased its premium income during the early part of the year in all its core business areas, especially risk insurance, savings life insurance and pension insurance.
“New sales were at a good level throughout the early part of the year. Risk life insurance sales to companies doubled compared to last year’s corresponding period. Also risk life assurance sales to private households increased by over 50 per cent. Savings life insurance sales increased by about 70 per cent, as especially the insurance-covered asset management solutions implemented through the Tapiola Private asset management concept increased,” says Kohmo.
Net investment income at current value was 2.9 per cent (2.2%). Investment assets at current value stood at EUR 2,589.2 million (EUR 2,565.1 million 12/2009).
The company’s solvency was good, as solvency capital was 18.9 per cent of technical provisions (17.3% 12/2009).
Tapiola Real Estate Ltd.
In the first half of 2010, Tapiola Real Estate increased both its turnover and operating profit compared to the corresponding period of 2009. The company’s turnover increased to EUR 4.4 million (EUR 3.6 million). The operating profit was EUR 0.2 million (EUR 0.1 million).
During the review period, the company carried out real estate investments totalling EUR 112.6 million (EUR 173.8 million) and real estate sales totalling EUR 0.4 million (EUR 39.2 million) for its customers. The market value of the real estate assets managed by the company increased to EUR 2,405.9 million (EUR 2,309.1 million 12/2009).
According to Vesa Immonen, Managing Director, one of the goals of 2010 is to increase current real estate funds and acquire additional real estate assets to be managed. “We strive to increase the total value of our managed real estate assets to about EUR 3 billion during the strategy period by the end of 2012,” states Immonen.
Further Information
Timo Laakso
Planning Director
Financial Services
Tel. +358 9 453 3048,
+358 50 326 8659
Sirpa Pönkkä
Controller
Financial Services
Tel. +358 9 453 2565,
+358 400 440 862