22 August 2007
PRESS RELEASE
Tapiola Group companies continued to expand their clientele in the first half of 2007. Premium income increased in both non-life and life-insurances. Clear growth was also recorded in the customer numbers and volumes of banking and asset management in the first part of 2007.
The operating profit of Tapiola Life Group was clearly up on the previous year. Tapiola General’s operating profit decreased slightly but its result remained at a good level.
Tapiola emphasised local operations in early 2007
Year 2007 is of particular importance to Tapiola: it marks the 150th anniversary of the oldest predecessor to the Group in its current form. In honour of the anniversary, Tapiola launched a campaign with significant offers to its private customers.
In June 2007 Tapiola announced its plans to renew the benefit programme for its private customers. The reforms will be phased in from November 2007 onwards and will affect nearly one million Finns. The new benefit programme covers both old and new customers.
Owner-customers get benefits concerning, for example, premiums, bank service fees and subscription fees. Tapiola Group has decided to distribute customer benefits in the form of discounts directly to customers. In the future, Tapiola will offer benefits on equal terms to all store alliances and will withdraw from its bonus cooperation with the S Group in May 2008. The customer benefits of the new programme are financially at least as good as those of the previous benefit programme.
At the beginning of 2007 Tapiola boosted its local operations with a significant organisation change. As a result, the responsibility for private and corporate customer services was transferred to new local managers as of the beginning of the year. Tapiola now has 28 local areas in Finland.
Following continued active recruiting efforts, Tapiola Group’s headcount has increased steeply to approximately 3,000.
Companies report solid finances
The finances of Tapiola Group companies lie on a solid foundation. Investment activities play a crucial role in the performance of insurance companies. The investment income of Tapiola General and Tapiola Life increased from 1 January 2007 to 30 June 2007.
According to Jari Eklund, Director of Investment Services in Tapiola General and Tapiola Life, the companies’ investment activities are based on independent investment surveys, the goal being to generate sufficient income also in weaker economic periods. The finances of Tapiola Group companies are built on solid foundations: Tapiola General and Tapiola Life are some of the most solvent companies in their fields.
“In early 2007 we decreased the share of corporate bonds in Tapiola General’s and Tapiola Life’s investment activities. Furthermore, interest rate risk has been kept lower than normal. The shares of stock and real estate investments have fallen slightly since the turn of the year," says Eklund, commenting on the first part of 2007.
In the first half of the year, Tapiola General’s investment income at current value was 4 percent (1.5%). Investments at current value totalled EUR 2,583.1 million (12/2006: EUR 2,443.5 million). Net investment income at current value amounted to EUR 100.2 million (EUR 34.1 million).
In the first half of the year, Tapiola Life’s investment income at current value was 3.1 percent (1.3%). Investments at current value totalled EUR 1,764.6 million (12/2006: EUR 1,774.2 million). Net investment income at current value amounted to EUR 54.5 million (EUR 22.3 million).
Tapiola Corporate Life’s investment income at current value totalled 2.8 percent (0.9%) in the first half of the year. Investments at current value totalled EUR 797.9 million (12/2006: EUR 802.3 million). Net investment income at current value amounted to EUR 22.0 million (EUR 7.2 million).
Tapiola General’s growth continues to outperform the field
Tapiola General’s consolidated operating profit totalled EUR 55.8 million (EUR 67.2 million).
Tapiola General’s comparable premium income increased by 8 percent to EUR 455.1 million. The growth rate of Tapiola General continues to outpace the rest of the field. According to the Federation of Finnish Financial Services, growth in direct insurance totalled 4.9 percent in January–June, compared to Tapiola General’s growth of 10.6 percent.
The Group’s overall result, i.e., operating profit and the change in the difference between current and book values of investments, totalled EUR 66.7 million (EUR 14.8 million).
The Group’s combined ratio excluding the unwinding of discount expenses was 106.8 percent (103.5%). The combined ratio increased as a result of the company’s inputs into ensuring its competitiveness, among other things. Tapiola General has distributed more owner-customer benefits and lowered prices. For example, in spring 2007 Tapiola General made further reductions to the motor liability insurance premiums of private passenger cars. The number of major accidents was bigger than usual in the first part of 2007, which also contributed to the increase in the ratio.
Steep increase in Tapiola Life’s operating profit
Tapiola Life recorded an operating profit of EUR 92.4 million (EUR 13.6 million).
Tapiola Life Group’s premium income increased by 2.3%, to EUR 99.2 million. Growth clearly outperformed general development in the field: according to the Federation of Finnish Financial Services, the premium income of life insurance companies decreased by 7.7 percent.
The Group’s overall result rose to EUR 38.8 million (EUR -47.0 million). It consists of operating profit and the change in the difference between current and book values of investments.
The Group’s expense ratio in proportion to total expense loadings was 109.8 percent (99.9%).
Tapiola Bank records growth in the number of customers
Tapiola Bank pays the best interest on current accounts in the field. Ever since the bank was established it has recorded steady growth in the number of customers, who now total more than 100,000. The number of customers has increased by some 21,500 since the beginning of the year.
Since the beginning of August, Tapiola Group’s fund and asset management services have been offered by a single company, Tapiola Asset Management Ltd. In May Tapiola Fund Management Company Ltd changed its name to Tapiola Asset Management Ltd, and in August the previous Tapiola Asset Management Ltd was merged into it. The merger clarifies the company structure and enables more efficient customer service.
Tapiola Asset Management Ltd is part of the Tapiola Bank Group. The banking group now has over 110,000 customers, and the customer assets entrusted to its management total EUR 6.3 million.
Tapiola bank’s deposit base increased to EUR 629.7 million and its credit portfolio to EUR 569.3 million.
Tapiola Bank’s result corresponded to long-term forecasts, losses totalling EUR 2.8 million (EUR -3.6 million). The operating profit of Tapiola Fund Management Ltd decreased slightly to EUR 0.233 million (EUR 0.766 million). The operating profit of Tapiola Asset Management Ltd also decreased to EUR 0.164 million (EUR 0.548 million).
Tapiola Real Estate Ltd launched operations
Tapiola Group’s real estate operations were incorporated on 1 January 2007 into Tapiola Real Estate Ltd. The company’s result in the first half of the year was EUR 0.4 million positive.
Contact for further information
Markku Paakkanen, Director, Financial and Information Management Services
Tel. +358 (0)9 453 2500
Tiina Niemi / Information Services