PRESS RELEASE
12 MARCH 2007
The number of Tapiola Group customers increased despite the tough competitive situation. Tapiola General, for example, has been the most steadily growing Finnish non-life insurance company for more than a decade. The number of private household customers increased by 16,000, and that of Tapiola Bank customers grew by almost 30,000. The number of fund unit holders experienced unprecedented growth, of more than 40% when compared to the previous year’s figure. Also, the number of investment services customers increased more than expected.
About EUR 117.5 million was paid to the customers as bonuses and rebates. This is EUR 13 million more than in the year before and a little over EUR 29 million more than in 2004.
Services for customers saw significant improvement
The versatile risk management services of Tapiola have, in their part, reduced the amount of damages for companies, which has been seen in a significant decrease in corporate customers’ loss ratio in the past two years. Projects developing insurance cover for companies’ assets and business, as well as those developing personal insurance services, increase customer satisfaction and the risk management level. Where product offerings are concerned, Tapiola developed separate motor vehicle insurance for the needs of companies. Tapiola General and Tapiola Life also underwent a significant organisational change to promote specialisation in addressing the needs of each customer group.
According to an EPSI Rating study, the customer service of Tapiola was the best among the large Finnish insurance companies in 2006. Tapiola’s new claims handling system has been implemented throughout Finland. Customers can file claims on the Web or over the phone. According to a customer survey, as many as 92% of Tapiola Bank customers are willing to recommend the bank. Such a high level of satisfaction is rare.
Growth shows also in number of personnel
The number of personnel has increased a great deal in the past 10 years, but in a financially sound manner. At the end of 2006, the total number of employees was 2,821, showing an increase of 256 persons from 2005. So far, a total of approximately EUR 20 million has been deposited in the Tapiola personnel fund; EUR 2.7 million in 2006.
Tapiola General’s operating profit remained at the good level of the previous year
The result of Tapiola General was good, and the Group’s operating profit came to EUR 90.1 million (EUR 99.0 million). Bonuses and rebates to the owner-customers increased to EUR 42.6 million (EUR 39.1 million).
Tapiola General Group’s premium income increased by 5.7 per cent, to EUR 622.8 million (EUR 589.0 million). Market share growth is expected to continue and increase to 18.5 per cent (18.2%). Tapiola General Group’s combined ratio before unwinding of discount expenses was 107.1 per cent (106.2%). This key figure shows the good efficiency of the mutual company for the customers: Tapiola’s claims and operating expenses are higher than the total of insurance premiums collected, which
are reduced somewhat by the healthy bonuses and rebates paid to the customers of the mutual company. The prices of Tapiola’s services take into account the return on investment from insurance premiums collected from the customers in advance.
Net investment income at current value achieved by parent company Tapiola General was 7.1 per cent (11.1%). The Group’s solvency capital increased to EUR 1,288.4 million (EUR 1,216.3 million), and its solvency ratio (solvency capital in relation to premiums earned) was 218.3 per cent (219.7%).
American A.M. Best Co., the oldest rating institution specialising in the insurance business, awarded Tapiola General a rating of A (Excellent). The excellent rating of Tapiola General was especially due to the company’s high solvency level and strong risk-carrying capacity, as well as a good corporate image in the Finnish market.
More than EUR 50 million of Tapiola Life result was used in securing future customer benefits
The result of Tapiola Life was good, and the Group’s operating profit increased to EUR 42.0 million (EUR 40.3 million). Furthermore, future customer benefits were secured by EUR 57.5 million (EUR 50.9). Customer benefits of Tapiola Life increased to EUR 22.8 million (EUR 16.7 million), which represents the top level in the industry.
Tapiola Life Group’s premium income decreased by 0.8%, to EUR 199.3 million (EUR 200.9 million). Tapiola Life’s premium income decreased significantly less than that in the industry in general.
Tapiola Life’s market share of premiums written was 6.5 per cent (6.4%) and market share of savings accrued 7.7 per cent (8.3%).
The net return on investment from parent company Tapiola Life’s investment operations at current value was 6.5 per cent (8.7%), while the corresponding return from subsidiary Tapiola Corporate Life totalled 5.5 per cent (8.7%).
The Group’s expense ratio in proportion to total expense loadings was 97.0 per cent (94.6%). The Group’s solvency capital totalled EUR 420.0 million (EUR 408.1 million), and the solvency ratio, or solvency capital in relation to technical provisions, remained good at 18.8 per cent (19.1%).
Tapiola’s financial companies reached their objectives
The number of Tapiola Bank Ltd. customers increased by 29,794 to a total of 78,478 customers. The bank’s credit portfolio was EUR 443.6 million (EUR 253.5 million) and deposit base EUR 489.6 million (EUR 306.3 million). Growth of the bank’s volumes was pleasing, better than anticipated.
Customers’ interest in the new bank has continued to increase, and the service rating given to the bank by customers is good. Persons about to transfer to a new bank were especially interested in the reasonable service charges and the fact that the interest rates is paid on the daily balance.
Losses for the accounting period decreased to EUR 7.9 million (loss of EUR 8.5 million). The result was in line with the plans when the significant additional investments in securing the service level are taken into account.
The fund capital of Tapiola Fund Management Company Ltd. increased by 34.3%, to EUR 1,308.1 million (EUR 974.3 million). The number of unit holders increased to 21,301 (15,067), and the company’s operating profit was EUR 1.3 million (EUR 1.7 million). In the fund business, the market share was 2.1 per cent (2.2.%). Tapiola Fund Management Company Ltd. is one of the 10 largest Finnish fund management companies.
On account of the return/risk ratio, the Tapiola funds have received the highest grades in the industry.
The customer funds managed by Tapiola Asset Management Ltd. grew by 14.0%, to EUR 5,262.0 million (EUR 4,615.1 million). The company’s operating profit was EUR 0.9 million. The Tapiola asset management company is one of the six largest Finnish asset management companies.
In 2007, the Tapiola asset management and fund management company will be merged into Tapiola Asset Management Ltd.
The result of Tapiola Pension was affected by investment allocation structure
The profit development of Tapiola Pension was affected by allocation development aimed at long-term management of investment risks and a decrease in the rate of interest. The overall result of Tapiola Pension, including unrealised value changes in investment assets, decreased to EUR 168.6 million (EUR 306.0 million).
The expense ratio remained good, at 76.5 per cent (72.3%) of insurance premium administrative income. Of the 2006 result, EUR 18.0 million (EUR 21.0 million) was reserved for premium discounts to be granted to customers.
Return on the Tapiola Pension investment portfolio decreased to 6.8 per cent (9.2%). Over a period of five years, average annual return on investment was 7.1%, and this result can be regarded as good for the period in question. The solvency margin increased to 24.3 per cent (24.1%) of solvency calculation technical provisions. The solvency margin was 2.2 times (2.6 times) the solvency limit.
FURTHER INFORMATION
Markku Paakkanen, Director of Financial and Data Management: tel. +358 (0)9 453 2500, www.tapiola.fi/vuosikertomus (in Finnish)