18.8.2011
PRESS RELEASE
Tapiola Group Insurance Companies' operating profits and premiums written, as well as the number of customers at the Bank Group, increased between 1 January and 30 June 2011:
• Tapiola General’s operating profit increased by EUR 22.5 million to EUR 37.9 million. The change in the difference between current and book values of investments weakened the overall result by EUR 28.2 million to EUR 9.6 million. Tapiola General’s premium income increased by 1.4 per cent to EUR 480.4 million.
• Tapiola Life’s operating profit increased by EUR 15.3 million to EUR 30.4 million. The Group’s overall result (operating profit combined with the change in the difference between current and book value of investments) totalled EUR 2.6 million. Tapiola Life’s premium income increased by 31.9 per cent to EUR 158.3 million.
• Tapiola Bank Group's operating profit increased by EUR 0.6 million to EUR 1.7 million. The Bank Group acquired 11,450 new customers, having 222,450 customers at the end of the period under review. Customer funds managed by Tapiola Asset Management, a company belonging to the Group, increased by EUR 13.5 million to EUR 5,906.5 million. Tapiola Asset Management gained 1,505 new unit holders for the funds it manages.
• Tapiola Pension’s return on investments at current value was 0.2 per cent, compared with 3.9 per cent in the previous June. The company’s overall result was EUR -142.4 million. Premium income increased by 5.7 per cent to EUR 758.5 million. Tapiola Pension’s solvency ratio was 27.5 per cent and the solvency position – i.e., the solvency margin in relation to the solvency limit – was 2.6.
• The turnover of Tapiola Real Estate Group increased by EUR 0.1 million to EUR 4.6 million, and operating profit rose by the same amount to EUR 0.4 million.
Review by the President
“The uncontrolled increase of indebtedness in several large countries is leading to a global economic crisis, and the normal elements that support the stability of the economy are no longer working. This emphasises the significance of risk analyses and risk management carried out by the individual players in the economy. Tapiola Group’s solvency position has remained strong also in the turbulent financial market after the period under review. In view of our customers’ financial security, I am concerned to see that the popularity of individual pension insurance policies has been declining, although the need for supplementing pension cover is clearly increasing”, says Asmo Kalpala, President and Chairman of Tapiola Group.
Results
Tapiola General
Tapiola General’s operating profit increased by EUR 22.5 million to EUR 37.9 million (EUR 15.4 million). The company’s overall result (operating profit combined with the change in the difference between current and book values of investments of EUR -28.2 million) totalled EUR 9.6 million (EUR 48.1 million).
In an uncertain investment environment, the net return on investment operations at current value was 1.5 per cent, compared with 2.9 per cent in the previous June. Net investment income at current value was EUR 44.2 million (EUR 79.6 million).
Tapiola General’s premium income increased by 1.4 per cent to EUR 480.4 million (EUR 474.0 million). The company’s direct business premium income increased by 1.1 per cent to EUR 434.5 million (EUR 429.6 million). The greatest growth was seen in employers’ liability insurance premium income, which increased by 6.8 per cent.
The company’s combined ratio excluding the unwinding of discount expenses was 107.2 per cent (106.8%). The combined ratio before unwinding of discount expense measures the company's profitability.
“Despite the slight increase in the combined ratio, profitability of direct insurance showed favourable development in all lines of insurance. Particularly positive was the significant decrease in the number of major losses and claims incurred. Reinsurance expenses increased because of previous years in which claims were high. Mainly for this reason, the effects of measures aimed at increasing profitability are not yet evident in the key figures,” says Juha-Pekka Halmeenmäki, Managing Director.
Tapiola General’s solvency capital was EUR 1,358.7 million (EUR 1,355.9 million in 12/2010), and its solvency ratio (solvency capital in relation to premiums earned) was 205.7 per cent (206.7% in 12/2010). The company’s solvency position is very strong.
Tapiola Life
Tapiola Life’s operating profit increased by EUR 15.3 million to EUR 30.4 million (EUR 15.1 million). The change in the difference between current and book values weakened the overall result by EUR 27.8 million to EUR 2.6 million (EUR 40.2 million).
Tapiola Life’s premium income increased by 31.9 per cent to EUR 158.3 million (EUR 120.0 million). According to the Federation of Finnish Financial Services, total premium income without liability transfers in the sector fell by 14.2 per cent. According to Minna Kohmo, Managing Director, the greatest growth in Tapiola Life’s premium income was seen in savings life insurance and term life insurance, which grew by 56.6 per cent to EUR 114.3 million (EUR 73.0 million).
Net investment income at current value was 1.5 per cent (2.9%). Investment assets at current value stood at EUR 2,546.9 million (EUR 2,560.8 million in 12/2010).
The Group’s solvency was good; the solvency ratio, or solvency capital in relation to technical provisions, was 18.0 per cent, compared with 18.1 per cent at the end of 2010.
Tapiola Bank Group
Tapiola Bank Group’s operating profit increased to EUR 1.7 million (EUR 1.1 million). According to Harri Lauslahti, Managing Director, low interest rates continued to burden the development of the interest margin. The interest margin rose by 21.9 per cent to EUR 7.9 million (EUR 6.5 million). Lending and other receivables grew to EUR 1,529 million (EUR 1,382 million in 12/2010) and deposits and other fund-raising from customers to EUR 1,523 million (EUR 1,488 million in 12/2010).
Customer funds managed by the Bank Group increased to EUR 7,421.2 million (EUR 7,366.4 million in 12/2010) by the end of the period under review.
The solvency ratio of the Bank Group was 12.6 per cent (12.1% in 12/2010) and the solvency ratio of the parent company, Tapiola Bank, was 14.1 per cent (13.7%).
The Bank Group continued to attract new customers at a moderate rate. The Bank Group acquired 11,450 new customers, having 222,450 customers at the end of the period under review (211,000 in 12/2010).
Customer funds managed by Tapiola Asset Management Ltd, a company that belongs to the Bank Group, increased by EUR 13.5 million to EUR 5,906.5 million (EUR 5,893.0 million 12/2010). The fund capital in the mutual funds managed by the asset management arm decreased by 3.2 per cent to EUR 1,753.0 million (EUR 1,810.4 million 12/2010).
Tapiola Asset Management gained 1,505 new unit holders for the funds it manages, having a total of 52,377 unit holders at the end of June (50,872 in 12/2010). The company’s share of the fund market remained steady, at 2.9 per cent (2.9% in 12/2010).
According to Tom Liljeström, Managing Director, the number of asset management customers also continued to grow during the first half of the year, and customer portfolios yielded good returns in view of the circumstances.
Tapiola Pension
Tapiola Pension's return on investments was positive despite the challenging markets. Net investment income at current value was 0.2 per cent (3.9%).
“At the beginning of the year, investment markets were characterised by a slowdown in economic growth and accelerated inflation. Furthermore, the uncertainty concerning the problems in the public-sector economies of the euro area weakened the markets in the first half of the year. In this situation, the positive return on investment activities can be considered favourable,” says Tapiola Pension’s Managing Director, Satu Huber.
Because of the decrease in investment income and the increased return requirement for technical provisions, the company’s overall result showed a loss of EUR 142.4 million (profit of EUR 237.2 million).
Tapiola Pension’s premium income increased by 5.7 per cent to EUR 758.5 million (EUR 717.5 million). The biggest growth was seen in premium income from self-employed person's pension insurance (YEL), which grew by 8.5 per cent.
The company’s solvency ratio was 27.5 per cent (29.6% in 12/2010) and the solvency position – i.e., the solvency margin in relation to the solvency limit – was 2.6 (3.0 in 12/2010). Without the temporary changes in legislation, the solvency ratio would have been 22.4 per cent (24.4% in 12/2010) and the solvency position 2.1 (2.4 in 12/2010).
Tapiola Real Estate Group
The turnover of Tapiola Real Estate Group increased by EUR 0.1 million to EUR 4.6 million at the end of June (EUR 4.5 million), and operating profit by EUR 0.1 million to EUR 0.4 million (EUR 0.3 million). The market value of the real estate assets managed by the company increased by EUR 103.1 million to EUR 2,642.5 million (EUR 2,539.4 million in 12/2010).
Tapiola Real Estate Group consists of the parent company, Tapiola Real Estate Ltd, and the management companies of the real estate fund business.
During the period under review, the Group made real estate investments totalling EUR 107.8 million (EUR 112.6 million) and real estate sales totalling EUR 7.6 million (EUR 15.1 million) for its customers.
“The investment assets of the funds managed by Tapiola Real Estate have increased at a good rate and the funds have acquired new investors,” says Vesa Immonen, Managing Director.
Additional information
Interim Reports 2011 (in Finnish)
Timo Laakso
Finance 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
Juha-Pekka Halmeenmäki
Managing Director
Tapiola General
Tel +358 9 453 2623
Minna Kohmo
Managing Director
Tapiola Life
Tel +358 9 453 3032
Harri Lauslahti
Managing Director
Tapiola Bank
Tel +358 9 453 7100
Tom Liljeström
Tapiola Asset Management Ltd
Managing Director
Tel +358 9 453 2102
Satu Huber
Managing Director
Tapiola Pension
Tel +358 9 453 2619
Vesa Immonen
Managing Director
Tapiola Real Estate
Tel +358 9 453 3412