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1 Insurance premiums written
EURm 2017 2016
P&C insurance 4,737 4,458
Life insurance
Insurance contracts 802 615
Investment contracts 457 475
Insurance premiums written, gross 5,996 5,548
Reinsurers' share
P&C insurance -174 -166
Life insurance, insurance contracts -7 -6
Reinsurers' share, total -181 -172
Group insurance premiums written total, net ¹) 5,815 5,375
1) The change in unearned premiums is presented in note 4, The change in insurance and investment liabilities.
2 Net income from investments
If
EURm 2017 2016
Financial assets
Derivative financial instruments
Gains/losses -35 -7
Loans and receivables
Interest income 9 9
Financial assets available-for-sale
Debt securities
Interest income 168 177
Impairment losses -48 -15
Gains/losses 46 -11
Equity securities
Gains/losses 117 45
Impairment losses -27 -16
Dividend income 46 40
Total 303 221
Total from financial assets 277 223
Other assets
Investment properties
Gains/losses 0 0
Other 0 1
Total from other assets 1 1
Expense on other than financial liabilities -7 -6
Effect of discounting annuities -33 -28
Fee and commission expenses
Asset management -23 -17
If insurance, total 216 173
Included in gains/losses from financial assets available-for-sale is a net gain of EURm -90 (12) transferred from the fair value reserve.
Topdanmark
EURm 2017 2016
Financial assets
Derivative financial instruments 18 -
Gains/losses
Financial assets for trading
Debt securities
Interest income 20 -
Gains/losses -5 -
Equity securities
Gains/losses 8 -
Dividend income 4 -
Total 28 -
Investments related to unit-linked contracts
Debt securities
Interest income 15 -
Gains/losses -6 -
Equity securities
Gains/losses 50 -
Dividend income 5 -
Other financial assets
Gains/losses 25 -
Total 90 -
Total from financial assets 136
Other assets -18 -
Effect of discounting annuities -11 -
Topdanmark, total 107 -
Mandatum
EURm 2017 2016
Financial assets
Derivative financial instruments
Gains/losses 170 -9
Financial assets designated as at fair value through p/l
Debt securities
Interest income 0 1
Gains/losses 0 -3
Total 1 -3
Investments related to unit-linked contracts
Debt securities
Interest income 43 50
Gains/losses -22 4
Equity securities
Gains/losses 311 198
Dividend income 36 32
Loans and receivables
Interest income -11 0
Other financial assets
Gains/losses 47 -8
Total 405 276
Loans and receivables
Interest income 2 4
Gains/losses -14 6
Total -13 10
Financial assets available-for-sale
Debt securities
Interest income 97 102
Gains/losses -204 30
Equity securities
Gains/losses 217 101
Impairment losses -19 -15
Dividend income 92 122
Total 183 340
Total financial assets 746 614
Other assets
Investment properties
Gains/losses 29 3
Other -10 6
Total other assets 19 9
Net fee income
Asset management -13 -15
Fee income 30 26
Total 16 11
Mandatum, total 782 634
Included in gains/losses from financial assets available-for-sale is a net gain of EURm -147 (-106) transferred from the fair value reserve.
Holding
EURm 2017 2016
Financial assets
Derivative financial instruments
Gains/losses 0 12
Loans and receivables 1 -5
Financial assets available-for-sale
Debt securities
Interest income 33 34
Gains/losses -32 10
Equity securities
Gains/losses 4 -26
Impairment losses 0 -1
Dividend income 4 12
Total 8 29
Other assets 1 1
Holding, total 10 36
Included in gains/losses from financial assets available for-sale is a net gain of EURm -7 (27) transferred from the fair value reserve.
Elimination items between segments -10 -16
EURm
Group net investment income, total 1,104 827
The changes in the fair value reserve are disclosed in the Statement of changes in equity. Other income and expenses comprise rental income, maintenance expenses and depreciation of investment property. All the income and expenses arising from investments are included in Net income from investments. Gains/losses include realised gains/losses on sales, unrealised and realised changes in fair values and exchange differences. Unrealised fair value changes for financial assets available-for-sale are recorded in other comprehensive income and presented in the fair value reserve in equity. The effect of discounting annuities in P&C insurance is disclosed separately. The provision for annuities is calculated in accordance with actuarial principles taking anticipated inflation and mortality into consideration, and discounted to take the anticipated future return on investments into account. To cover the costs for upward adjustment of annuity provisions required for the gradual reversal of such discounting, an anticipated return on investments is added to annuity results.
3 Claims incurred
EURm 2017 2016
Claims paid
P&C insurance -3,036 -2,818
Life insurance
Insurance contracts -845 -692
Investment contracts -311 -355
Claims paid, gross -4,193 -3,865
Reinsurers' share
P&C insurance 100 73
Life insurance, insurance contracts 5 3
Reinsurers's share, total 105 76
Claims paid total, net -4,088 -3,789
Change in claims provision
P&C insurance 75 87
Life insurance, insurance contracts 0 77
Change in claims provision, gross 76 164
Reinsurers' share
P&C insurance -8 -2
Life insurance, insurance contracts -3 0
Reinsurers's share, total -11 -2
Change in claims provision, net 65 162
Group claims incurred, total -4,023 -3,627
4 Change in liabilities for insurance and investment contracts
EURm 2017 2016
Change in unearned premium provision
P&C insurance 32 -4
Life insurance
Insurance contracts -356 -277
Investment contracts -263 -165
Total change in liabilities, gross -587 -446
Reinsurers' share
P&C insurance -17 -2
Group change in liabilities for insurance and investment contracts total, net -603 -448
5 Staff costs
EURm 2017 2016
Wages and salaries -474 -414
Cash-settled share-based payments -28 -11
Share-settled share-based payments -2 -
Pension costs
- defined contribution plans -67 -64
- defined benefit plans (Note 29) -9 -5
Other social security costs -97 -80
Group staff costs, total -676 -574
More information on share-based payments in note 34 Incentive schemes.
6 Other operating expenses
EURm 2017 2016
IT costs -124 -122
Other staff costs -20 -16
Marketing expenses -46 -43
Depreciation and amortisation -25 -14
Rental expenses -56 -50
Change in deferred acquisition costs -6 -10
Direct insurance comissions -167 -171
Comissions of reinsurance assumed -1 -1
Commissions on reinsurance ceded 18 15
Other -109 -139
Group other operating expenses, total -536 -551
Item Other includes e.g. expenses related to communication, external services and other administrative expenses.
7 Result analysis of If
EURm 2017 2016
Insurance premiums earned 4,293 4,286
Claims incurred -2,959 -2,905
Operating expenses -705 -713
Other insurance technical income and expense -8 -7
Allocated investment return transferred from the non-technical account 19 -3
Technical result 640 658
Net investment income account 229 188
Allocated investment return transferred to the technical account -52 -26
Other income and expense 0 3
Operating result 818 824
Specification of activity-based operating expenses included in the income statement
EURm 2017 2016
Claims-adjustment expenses (claims paid) -241 -235
Acquisition expenses (operating expenses) -490 -490
Joint administrative expenses for insurance business (operating expenses) -227 -226
Administrative expenses pertaining to other technical operations (operating expenses) -35 -33
Asset management costs (investment expenses) -23 -17
Total -1,016 -1,002
8 Earnings per share
EURm 2017 2016
Earnings per share
Profit or loss attributable to the equity holders of the parent company 2,216 1,650
Weighted average number of shares outstanding during the period 560 560
Earnings per share (EUR per share) 3.96 2.95
9 Financial assets and liabilities
Financial assets and liabilities have been categorised in accordance with IAS 39.9. In the table are also included interest income and expenses, realised and unrealised gains and losses recognised in P/L, impairment losses and dividend income arising from those assets and liabilities. The financial assets in the table include balance sheet items Financial assets, Cash and cash equivalents and Assets held for sale.
2017
EURm Carrying amount Interest inc./exp. Gains/losses Impairment losses Dividend income
FINANCIAL ASSETS
Financial assets at fair value through p/l
Derivative financial instruments 85 -40 185 - -
Financial assets for trading 5,421 29 3 - 4
Financial assets designated as at fair value through p/l 0 0 0 - 0
Loans and receivables 3,275 11 -13 - -
Financial assets available-for-sale 16,982 281 160 -106 142
Group financial assets, total 25,764 281 335 -106 146
FINANCIAL LIABILITIES
Financial liabilities at fair value through p/l
Derivative financial instruments 96 - -
Other financial liabilities 3,553 -52 4
Group financial liabilities, total 3,649 -52 4
2016
EURm Carrying amount Interest inc./exp. Gains/losses Impairment losses Dividend income
FINANCIAL ASSETS
Financial assets at fair value through p/l
Derivative financial instruments 45 -21 18 - -
Financial assets designated as at fair value through p/l 24 1 0 - 0
Loans and receivables 2,689 13 6 - -
Financial assets available-for-sale 17,705 298 146 -47 175
Group financial assets, total 20,463 290 169 -47 175
FINANCIAL LIABILITIES
Financial liabilities at fair value through p/l
Derivative financial instruments 81 - -
Other financial liabilities 3,766 -52 34
Group financial liabilities, total 3,847 -52 34
10 Property, plant and equipment
2017 2016
EURm Land and buildings Equipment Total Land and buildings Equipment Total
At 1 January
Cost 6 77 83 6 77 84
Accumulated depreciation -2 -54 -56 -2 -56 -57
Net carrying amount at 1 January 4 22 27 5 22 26
At 31 December
Cost 5 71 76 6 77 83
Business acquisitions 115 50 165
Accumulated depreciation -2 -81 -83 -2 -54 -56
Net carrying amount at 31 December 118 40 158 4 22 27
Equipment in different segments comprise IT equipment and furniture.
11 Investment property
EURm 2017 2016
At 1 January
Cost 301 282
Accumulated depreciation -67 -63
Accumulated impairment losses -24 -24
Net carrying amount at 1 January 211 195
Net carrying amount at 1 January 211 195
Business acquisitions 491 -
Transfers to property, plant and equipment -2 -
Additions 29 41
Disposals -67 -22
Depreciation -4 -4
Impairment losses -6 1
Exchange differences 0 0
Net carrying amount at 31 December 653 211
At 31 December
Cost 753 301
Accumulated depreciation -71 -67
Accumulated impairment losses -29 -24
Net carrying amount at 31 December 653 211
Rental income from investment property 27 23
Property rented out under operating lease
Non-cancellable minimum rental
- not later than one year 33 10
- later than one year and not later than five years 45 14
- later than five years 24 3
Total 102 28
Expenses arising from investment property
- direct operating expenses arising from investment property generating rental income during the period -13 -10
- direct operating expenses arising from investment property not generating rental income during the period -4 -2
Total -17 -12
Fair value of investment property at 31 December 688 243
Fair values for the Group's investment property are entirely determined by the Group based on the market evidence. The determination and hierarchy of financial assets and liabilities at fair value is disclosed in note 17. Based on the principles of this determination, the investment property falls under levels 2 and 3.
The premises in investment property for different segments are leased on market-based, irrevocable contracts. The lengths of the contracts vary from those for the time being to those for several years.
12 Intangible assets
2017
EURm Goodwill *) Customer relations and Trademark Other intangible assets Total
At 1 January
Cost 679 - 67 746
Accumulated amortisation - - -46 -46
Net carrying amount at 1 January 679 - 22 700
At 31 December
Cost 694 - 149 843
Business acquisitions 783 633 59 1,475
Accumulated amortisation - - -122 -122
Net carrying amount at 31 December 1,476 633 86 2,196
Mandatum's assets held for sale -75
Group intangible assets, total 2,121
2016
EURm Goodwill *) Other intangible assets Total
At 1 January
Cost 700 67 766
Accumulated amortisation - -43 -43
Net carrying amount at 1 January 700 24 724
At 31 December
Cost 679 67 746
Accumulated amortisation - -46 -46
Net carrying amount at 31 December 679 22 700
Mandatum's assets held for sale -89
Group intangible assets, total 611
Goodwill is split between the segments as follows: 2017 2016
If 510 526
Topdanmark 813 -
Mandatum 153 153
1,476 679
*) The change in the cost is due both to Topdanmark's consolidation as a subsidiary and If P&C Insurance Ltd becoming a branch of its Swedish sister company. Exchange differences affect the cost of the intangible assets as well.
At the business acquisition of Topdanmark, EURm 95 were allocated to trademark. The useful life of trademark is deemed indefinite and it will not be amortised.
Other intangible assets in all segments comprise mainly IT software.
Depreciation and impairment losses are included in the income statement item Other operating expenses.
Testing goodwill for impairment
Goodwill is tested for impairment in accordance with IAS 36 Impairment of assets. No impairment losses have been recognised based on these tests.
For the purpose of testing goodwill for impairment, Sampo determines the recoverable amount of its cash-generating units, to which goodwill has been allocated, on the basis of value in use. Sampo has defined these cash-generating units as If Group, Topdanmark Group and Mandatum Life Insurance Company Ltd (Mandatum hereafter).
The recoverable amounts for If and Mandatum have been determined by using a discounted cash flow model. The model is based on Sampo’s management’s best estimates of both historical evidence and economic conditions such as volumes, interest rates, margins, capital structure and income and cost development. The value in use model for Mandatum is greatly influenced by the long-term development of insurance liabilities, affecting e.g. the required solvency capital and thus the recoverable amount. That is why the forecast period is longer for Mandatum, 10 years. The derived cash flows were discounted at the pre-tax rates of the cost of equity which for If was 8.7% and for Mandatum Life 9.5%. The cost of equity is used as the cost of capital as neither company has principal outstanding.
Forecasts for If, approved by the management, cover years 2018 – 2020. The cash flows beyond that have been extrapolated using a 2% growth rate. A 2% growth rate for years beyond 2027 has been used for the for Mandatum Life as well, as it is believed to be close to the anticipated inflation in both cases.
In Mandatum Life, the recoverable amount exceeds its carrying amount by some EURm 600. With the calculation method used, e.g. an increase of about 2% point in the cost of equity could lead to a situation where the recoverable amount of the entity would equal its carrying amount.
As for the If Group, the management believes that any reasonably possible change in any of these key assumptions would not cause the aggregate carrying amount to exceed the aggregate recoverable amount.
IAS 36 permits determing the recoverable amount by using the fair value less costs to sell. For Topdanmark, the valuation of goodwill has been tested on the balance sheet date by using that method. Topdanmark's share price at the acquisition date 30 September 2017 was 247.70 Danish crowns and 268.10 Danish crowns on 31 December 2017. The fair value of Topdanmark on the balance sheet date exceeds its carrying amount in the Group.
13 Investments in associates
Associates that have been accounted for by the equity method at 31 Dec. 2017
EURm

Name		 Domicile Carrying amount Fair value*) Interest held %
Nordea Bank Abp Sweden 7,578 8,680 21.25
Autovahinkokeskus Oy Finland 3 35.54
CAP Group AB Sweden 3 21.98
Svithun Assuranse AS Norway 1 33.00
Contemi Holding AS Norway 0 28.57
SOS International A/S Denmark 8 25.20
Bornholms Brandforsikring A/S Denmark 10 27.00
Komplementarselskabet Margretheholm ApS Denmark 0 50.00
Komplementarselskabet Havneholmen ApS Denmark 0 50.00
Margretheholm P/S Denmark 23 50.00
Havneholmen P/S Denmark 64 50.00
P/S Ejendomsholding Banemarksvej Denmark 6 40.00
Komplementarselskabet Banemarksvej ApS Denmark 0 40.00
Carlsberg Byen P/S Denmark 69 22.51
Associates that have been accounted for by the equity method at 31 December 2016
EURm

Name		 Domicile Carrying amount Fair value*) Interest held %
Nordea Bank Abp Sweden 7,554 9,124 21.25
Topdanmark A/S Denmark 554 955 45.38
Autovahinkokeskus Oy Finland 3 35.54
CAP Group AB Sweden 2 21.98
Svithun Assuranse AS Norway 1 33.00
Contemi Holding AS Norway 0 28.57
SOS International A/S Denmark 7 25.20
*) Published price quatation
Changes in investments in associates
2017 2016
EURm Nordea Other associates Total Nordea Other associates Total
At beginning of year 7,554 553 8,107 7,305 374 7,679
Share of loss/profit 616 5 622 773 65 837
Business acquisitions - 169 - - - -
Additions - - - - 205 205
Disposals -559 -540 -1,099 -551 -5 -555
Changes in the equity of associates -33 - -33 27 -86 -59
Exchange differences - 0 0 - 0 0
At end of year 7,578 187 7,596 7,554 553 8,107
The carrying amount of investments in associates included goodwill EURm 990 (1,101), including goodwill from the Nordea acquisition EURm 978 (978).
Sampo's holding in Nordea
Nordea is an universal bank with positions within corporate merchant banking as well as retail banking and private banking. With approximately 700 branches, call centers in all Nordic countries and an e-bank, Nordea also has a large distribution network for customers in the Nordic and Baltic sea region.
Financial information on Nordea
EURm 2017 2016
Assets 581,612 615,659
Liabilities 548,296 583,249
Goodwill included in the assets 1,994 2,247
Revenue 9,469 9,927
Other comprehensive income items -520 165
Comprehensive income statement 3,048 3,766
Dividend income from the associate during the financial year 559 551
Reconciliation of Nordea's carrying amount to Nordea's financial information
EURm 2017 2016
Net assets of Nordea 30,404 30,162
Sampo's share of 21.25% 6,461 6,409
Remaining allocataions
Goodwill 978 978
Trademark and customer relations, net 139 166
Total carrying amount 7,578 7,554
Sampo's holding in Topdanmark
Topdanmark is the second largest insurance company in Denmark, and is primarily engaged in providing life and non-life insurance products. Sampo consolidated Topdanmark as an associated company until 30 September 2017 when it became a subsidiary of Sampo. The share of associates' profit for 2017 is thus for the time period of 1.1. - 30.9.2017. The last quarter of Topdanmark's profit has been conslidated line by line in the Group's financial statements.
Sampo's share of Topdanmark's profit/loss
EURm 2017 2016
Share of loss/profit of the associate 99 67
Amortisation of the customer rlations -12 -11
Change in deferred tax 3 2
Share of the loss/profit of an associate 90 59
14 Financial assets
Group's financial assets comprise investments in derivatives, financial assets designated as at fair value through p/l, loans and receivables, available-for-sale financial assets and investments in subsidiaries. The Holding segment includes also investments in subsidiaries.
The Group uses derivative instruments for trading and for hedging purposes. The derivatives used are foreign exchange, interest rate and equity derivatives. Fair value hedging has been applied during the financial year in Mandatum.
EURm 2017 2016
If
Derivative financial instruments 25 14
Loans and receivables 83 84
Financial assets available-for-sale 11,109 11,569
If, total 11,217 11,667
Topdanmark
Derivative financial instruments 16 -
Assets held for trading 5,692
Loans and receivables 458 -
Topdanmark, total 6,166 -
Mandatum
Derivative financial instruments 31 13
Financial assets designated as at fair value through p/l - 24
Loans and receivables 0 20
Financial assets available-for-sale 5,144 5,612
Total 5,176 5,670
Assets held for sale -198 -210
Mandatum, total 4,977 5,459
Holding
Derivative financial instruments 13 18
Loans and receivables 0 0
Financial assets available-for-sale 729 814
Investments in subsidiaries 3,767 2,370
Holding, total 4,510 3,201
Elimination items between segments -4,038 -2,659
Group financial assets, total 22,832 17,668
Derivative financial instruments
2017 2016
Contract/ Fair value Contract/ Fair value
EURm notional amount Assets Liabilities notional amount Assets Liabilities
Derivatives held for trading
Interest rate derivatives
OTC derivatives
Intrerest rate swaps 2,836 6 77 735 12 4
Foreign exchange derivatives
OTC derivatives
Currency forwards 11,131 74 18 5,317 27 75
Currency options, bought and sold 188 2 1 92 0 0
Total foreign exchange derivatives 11,319 76 18 5,409 27 75
Equity derivatives
OTC derivatives
Equity and equity index options 0 0 0 9 3 3
Equity futures 44 0 0 - - -
Total equity derivatives 44 0 0 9 3 3
Total derivatives held for trading 14,199 82 96 6,153 43 81
Derivatives held for hedging
Fair value hedges
Currency forwards 364 3 0 534 2 0
Total derivatives held for hedging 364 3 0 534 2 0
Group financial derivatives, total 14,563 85 96 6,687 45 81
Fair value hedges
Fair value hedging is used to hedge a proportion of foreign exchange and interest risk in available-for-sale financial assets. The interest elements of forward contracts have been excluded from hedging relationships in foreign exchange hedges. Net result from exchange derivatives designated as fair value hedges amounted to EURm -63 (19). Net result from hedged risks in fair value hedges of available for sale financial assets amounted to EURm 63 (-19).
Other financial assets
EURm 2017 2016
Financial assets designated as at fair value through p/l
Debt securities 4,628 22
Equty securities 793 2
Total financial assets designated as at fair value through p/l 5,422 24
Loans and receivables 542 104
Financial assets available-for-sale
Debt securities 13,081 13,503
Equity securities 3,902 4,202
Total financial assets available-for-sale 16,982 17,705
Financial assets available-for-sale include impairment losses EURm 288 (242).
Group other financial assets, total 22,945 17,833
Mandatum's assets held for sale -198 -210
EURm 2017 2016
Group financial assets, total 22,832 17,668
15 Fair values
2017 2016
EURm Fair value Carrying ammount Fair value Carrying amount
Financial assets, group
Financial assets 22,375 22,375 17,880 17,879
Investments related to unit-linked contracts 7,409 7,409 3,427 3,427
Other assets 469 469 49 49
Cash and cash equivalents 2,734 2,734 2,585 2,585
Total 32,987 32,987 23,941 23,940
Financial liablities, group
Financial liabilities 3,829 3,747 3,910 3,847
Other liabilities 63 63 31 31
Total 3,892 3,810 3,941 3,878
In the table above are presented fair values and carrying amounts of financial assets and liabilities. Assets held for sale are included in the figures. The detailed measurement bases of financial assets and liabilities are disclosed in Group Accounting policies.
The fair value of investment securities is assessed using quoted prices in active markets. If published price quotations are not available, the fair value is assessed using discounting method. Values for the discount rates are taken from the market’s yield curve.
The fair value of the derivative instruments is assessed using quoted market prices in active markets, discounting method or option pricing models.
The fair value of loans and other financial instruments which have no quoted price in active markets is based on discounted cash flows, using quoted market rates. The market’s yield curve is adjusted by other components of the instrument, e.g. by credit risk.
The fair value for short-term non-interest-bearing receivables and payables is their carrying amount.
Disclosed fair values are "clean" fair values, i.e. less interest accruals.
16 Determination and hierarchy of fair values
A large majority of Sampo Group's financial assets are valued at fair value. The valuation is based on either published price quatations or valuation techniques based on market observable inputs, where available. For a limited amount of assets the value needs to be determined using other techniques. The financial instruments measured at fair value have been classified into three hierarchy levels in the notes, depending on e.g. if the market for the instrument is active, or if the inputs used in the valuation technique are observable.

On level 1, the measurement of the instrument is based on quoted prices in active markets for identical assets or liabilities.

On level 2, inputs for the measurement of the instrument include also other than quoted prices observable for the asset or liability, either directly or indirectly by using valuation techniques.

In level 3, the measurement is based on other inputs rather than observable market data.

The figures include the financial assets classified as Assets held for sale.
EURm Level 1 Level 2 Level 3 Total
FINANCIAL ASSETS AT 31 DECEMBER 2017
Derivative financial instruments
Interest rate swaps - 6 - 6
Foreign exchange derivatives - 79 - 79
Equity derivatives - 1 - 1
- 86 - 86
Assets held for trading
Equity securities 608 185 - 793
Debt securities 3,953 868 77 4,899
4,561 1,053 77 5,692
Financial assets designated at fair value through profit or loss
Deposits - 457 - 457
Financial assets related to unit-linked insurance
Equity securities 2,223 4 6 2,233
Debt securities 1,163 1,625 38 2,826
Mutual funds 3,786 940 359 5,085
Derivative financial instruments - 15 - 15
7,173 2,584 403 10,160
Financial assets available-for-sale
Equity securities 1,939 - 42 1,981
Debt securities 9,922 2,854 34 12,810
Mutual funds 1,183 62 675 1,921
13,045 2,916 751 16,712
Total financial assests measured at fair value 24,779 7,096 1,231 33,106
FINANCIAL LIABILITIES AT 31 DECEMBER 2017
Derivative financial instruments
Interest rate derivatives - 77 - 77
Foreign exchange derivatives - 19 - 19
Total financial liabilities measured at fair value - 96 - 96
EURm Level 1 Level 2 Level 3 Total
FINANCIAL ASSETS AT 31 DECEMBER 2016
Derivative financial instruments
Interest rate swaps - 12 - 12
Foreign exchange derivatives - 30 - 30
Equity derivatives - 3 - 3
- 45 - 45
Financial assets designated at fair value through profit or loss
Equity securities 2 - - 2
Debt securities 18 4 0 22
20 4 0 24
Financial assets related to unit-linked insurance
Equity securities 664 13 14 692
Debt securities 748 650 27 1,424
Mutual funds 2,954 902 154 4,009
Derivative financial instruments - 2 - 2
4,366 1,567 194 6,128
Financial assets available-for-sale
Equity securities 2,123 - 48 2,171
Debt securities 9,410 4,036 58 13,504
Mutual funds 1,212 60 758 2,030
12,746 4,096 863 17,705
Total financial assests measured at fair value 17,132 5,713 1,057 23,902
EURm Level 1 Level 2 Level 3 Total
FINANCIAL LIABILITIES AT 31 DECEMBER 2016
Derivative financial instruments
Interest rate derivatives - 4 - 4
Foreign exchange derivatives - 74 - 74
Equity derivatives - 3 - 3
Total financial liabilities measured at fair value - 81 - 81
Transfers between levels 1 and 2
2017 2016
Transfers from level 2 to level 1 Transfers from level 1 to level 2 Transfers from level 2 to level 1 Transfers from level 1 to level 2
Financial assets held for trading
Debt securities 59 - - -
Financial assets related to unit-linked insurance
Equity securities 49 48 3 4
Debt securities 18 - - -
67 48 3 4
Financial assets available-for-sale
Debt securities 811 649 459 502
Sensitivity analysis of fair values
The sensitivity of financial assets and liabilites to changes in exchange rates is assessed on business area level due to different base currencies. In If, 10 percentage point depreciation of all other currencies against SEK would result in an increase recognised in profit/loss of EURm 13 (10) and in a decrease recognised directly in equity of EURm -12 (-8). In Topdanmark, 10 percentage depreciation of all other currencies against DKK would result in a decrease recognised in profit/loss of EURm -1, but would not have an impact on equity. In Mandatum, 10 percentage point depreciation of all other currencies against EUR would result in an increase recognised in profit/loss of EURm 12 (12) and in a decrease recognised directly in equity of EURm -79 (-94). In Holding, 10 percentage point depreciation of all other currencies against EUR would have no impact in profit/loss, but a decrease recognised in equity of EURm -216 (-163).
The sensitivity analysis of the Group's fair values of financial assets and liabilities in differenct market risk scenarios is presented below. The effects represent the instantaneous effects of a one-off change in the underlying market variable on the fair values on 31 December 2017.
The sensitivity analysis includes the effects of derivative positions. All sensitivities are calculated before taxes.
The debt issued by Sampo plc is not included.
Interest rate Equity Other financial investments
1% parallel shift down 1% parallel shift up 20% fall in prices 20% fall in prices
Effect recognised in profit/loss 173 -200 -122 -37
Effect recognised directly in equity 278 -262 -628 -158
Total effect 173 -200 -122 -37
17 Movements in level 3 financial instruments measured at fair value
EURm 1.1. Total gains/losses in income statement Total gains/losses recorded in other comprehensive income Purchases *) Sales 31.12. Gains/losses included in p/l for financial assets at 31.12.2017
FINANCIAL ASSETS AT 31 DECEMBER 2017
Financial assets held for trading
Debt securities - -4 - 89 -9 77 -4
Financial assets related to unit-linked insurance
Equity securities 14 -8 - 7 -6 6 -8
Debt securities 27 0 - 21 -9 38 0
Mutual funds 154 10 - 242 -47 359 11
194 2 - 269 -62 403 3
Financial assets available-for-sale
Equity securities 48 10 -1 6 -21 43 -2
Debt securities 58 0 0 334 -358 34 0
Mutual funds 757 -49 11 180 -226 674 -36
864 -38 10 520 -604 751 -38
Total financial assests measured at fair value 1,058 -40 10 878 -675 1,231 -39
*) Purhcases of debt securities include additions from business acquisitions EURm 57 in assets held for trading and EURm 21 in financial assets related to unit-linked insurance.
2017
EURm Realised gains/losses Fair value gains and losses Total
Total gains or losses included in profir or loss for the financial year -37 8 -29
Total gains or losses included in profit and loss for assets held at the end of the financial year -46 8 -39
EURm 1.1. Total gains/losses in income statement Total gains/losses recorded in other comprehensive income Purchases Sales 31.12. Gains/losses included in p/l for financial assets at 31.12.2016
FINANCIAL ASSETS AT 31 DECEMBER 2016
Financial assets related to unit-linked insurance
Equity securities 17 -6 - 12 -9 14 -4
Debt securities 27 0 - 0 0 27 0
Mutual funds 46 -3 - 129 -19 154 -2
89 -9 - 142 -29 194 -5
Financial assets available-for-sale
Equity securities 46 2 -1 6 -4 48 -2
Debt securities 90 1 0 213 -246 58 0
Mutual funds 801 0 -20 174 -198 757 -21
936 4 -22 393 -448 863 -22
Total financial assests measured at fair value 1,026 -5 -22 535 -477 1,057 -27
2016
EURm Realised gains/losses Fair value gains and losses Total
Total gains or losses included in profir or loss for the financial year -5 -22 -26
Total gains or losses included in profit and loss for assets held at the end of the financial year -6 -22 -27
18 Sensitivity analysis of level 3 financial instruments measured at fair value
2017 2016
EURm Carrying amount Effect of reasonably possible alternative assumptions (+ / -) Carrying amount Effect of reasonably possible alternative assumptions (+ / -)
Financial assets
Financial assets available-for-sale
Equity securities 42 -8 48 -10
Debt securities 34 -1 58 -2
Mutual funds 675 -135 758 -152
Total 751 -145 863 -163
The value of financial assets regarding the debt security instruments has been tested by assuming a rise of 1 per cent unit in interest rate level in all maturities. For other financial assets, the prices were assumed to go down by 20 per cent. Sampo Group bears no investment risks related to unit-linked insurance, so a change in assumptions regarding these assets does not affect profit or loss. On the basis of the these alternative assumptions, a possible change in interest levels at 31 December 2017 would cause a descend of EURm 1 (2) for the debt instruments, and EURm 143 (162) valuation loss for other instruments in the Group's other comprehensive income. The reasonably possible effect, proportionate to the Group's equity, would thus be 1.1 per cent (1.4).
19 Investments related to unit-linked insurance contracts
EURm 2017 2016
Financial assets designated at fair value through p/l
Debt securities 2,826 1,426
Equity securities 6,870 4,660
Total 9,697 6,086
Loans and other receivables 373 330
Other financial assets 440 2
Investments related to unit-linked insurance contracts, total 10,509 6,419
Mandatum's assets held for sale -3,100 -2,992
Group investments related to unit-linked contracts, total 7,409 3,427
20 Deferred tax assets and liabilities
Changes in deferred tax during the financial period 2017
EURm 1.1. Business acquisitions Recognised in comprehensive income statement Recognised in equity Exchange differences 31.12
Deferred tax assets
Tax losses carried forward 15 0 0 0 0 15
Employee benefits 28 0 -6 -1 -1 20
Other deductible temporary differences 13 2 -1 2 -1 15
Total 56 2 -7 1 -2 50
Netting of deferred taxes -32
Deferred tax assets in the balance sheet 18
Deferred tax liabilities
Depreciation differences and untaxed reserves 257 0 -58 0 -10 189
Changes in fair values 265 0 -3 11 -2 271
Other taxable temporary differences 33 197 -22 1 0 209
Total 555 197 -83 12 -12 670
Netting of deferred taxes -32
Total deferred tax liabilities in the balance sheet 638
Changes in deferred tax during the financial period 2016
EURm 1.1. Recognised in comprehensive income statement Recognised in equity Exchange differences 31.12
Deferred tax assets
Tax losses carried forward 15 0 0 0 15
Changes in fair values 35 -8 1 0 28
Other deductible temporary differences 19 -7 0 1 13
Total 68 -15 1 1 56
Netting of deferred taxes -28
Deferred tax assets in the balance sheet 27
Deferred tax liabilities
Depreciation differences and untaxed reserves 251 6 0 0 257
Changes in fair values 221 -2 48 -2 265
Other taxable temporary differences 28 4 1 0 33
Total 500 8 49 -2 555
Netting of deferred taxes -28
Total deferred tax liabilities in the balance sheet 527
In Sampo plc, EURm 27 of deferred tax asset has not been recognised on unused tax losses. The first losses will expire in 2019.

In life insurance, EURm 3 of deferred tax asset has not been recognised on unused tax losses.
21 Taxes
EURm 2017 2016
Profit before tax 2,482 1,871
Tax calculated at parent company's tax rate -496 -374
Different tax rates on overseas earnings -14 -14
Income not subject to tax 3 7
Expenses not allowable for tax purposes -13 -4
Consolidation procedures and eliminations 279 165
Tax losses for which no deferred tax asset has been recognised -2 2
Changes in tax rates - 0
Tax from previous years 0 -3
Total -243 -221
22 Components of other comprehensive income
EURm 2017 2016
Other comprehensive income:
Items reclassifiable to profit or loss
Exchange differences -96 -80
Available-for-sale financial assets
Gains/losses arising during the year 324 302
Reclassification adjustments -244 -66
The share of the segretated Suomi portfolio -7 -11
Share of associate's other comprehensive income -57 19
Taxes -18 -49
Total items reclassifiable to profit or loss, net of tax -97 115
Items not reclassifiable to profit or loss
Actuarial gains and losses from defined pension plans 5 -6
Taxes -1 1
Total items not reclassifiable to profit or loss, net of tax 4 -5
23 Tax effects relating to components of other comprehensive income
2017 2016
EURm Before-tax amount Tax Net-of-tax amount Before-tax amount Tax Net-of-tax amount
Items reclassifiable to profit or loss
Exchange differences -96 - -96 -80 - -80
Available-for-sale financial assets 73 -18 55 225 -49 176
Share of associate's other comprehensive income -57 - -57 19 - 19
Total -79 -18 -97 164 -49 115
24 Other assets
EURm 2017 2016
Interests 116 86
Assets arising from direct insurance operations 1,259 1,182
Assets arising from reinsurance operations 50 51
Settlement receivables 12 49
Deferred acquisition costs 1) 152 123
Assets related to Patient Insurance Pool 114 120
Other 236 148
Group other assets, total 1,939 1,761
Item Other comprise rental deposits, salary and travel advancements and assets held for resale.
Other assets include non-current assets EURm 109 (114).
1) Change in deferred acquisition costs in the period
EURm 2017 2016
At 1 January 123 131
Business acquisitions 41 -
Net change in the period -6 -10
Exchange differences -6 2
At 31 December 152 123
25 Liabilities from insurance and investment contracts
P&C liabilities from insurance contracts
2017 2016
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for unearned premiums 2,399 51 2,348 2,042 44 1,997
Provision for claims outstanding 8,882 243 8,640 7,338 192 7,146
Incurred and reported losses 2,909 173 2,736 1,596 114 1,482
Incurred but not reported losses (IBNR) 3,093 70 3,023 3,327 78 3,249
Provisions for claims-adjustment costs 2,226 0 2,226 267 - 267
Provisions for annuities and sickness benefits 654 - 654 2,148 - 2,148
P&C insurance total 11,281 294 10,987 9,379 236 9,143
As Topdanmark and especially If are exposed to various exchange rates, comparing the balance sheet data from year to year can be misleading.
Change in P&C insurance liabilities
2017 2016
EURm Gross Ceded Net Gross Ceded Net
Provision for unearned premiums
At 1 January 2,042 44 1,997 2,017 46 1,971
Business acquisitions 463 24 487 -
Exchange differences -75 -2 -77 20 1 21
Change in provision -30 -15 -45 4 -2 2
At 31 December 2,399 51 2,348 2,042 44 1,997
2017 2016
EURm Gross Ceded Net Gross Ceded Net
Provision for claims outstanding
At 1 January 7,338 192 7,146 7,416 193 7,223
Business acquisitions 1,809 70 1,739 - - -
Acquired/disposed insurance holdings 33 - 33 28 - 28
Exchange differences -204 -11 -196 -19 1 -20
Change in provision -93 -8 -85 -87 -2 -86
At 31 December 8,882 243 8,640 7,338 192 7,146
The tables below show the cost trend for the claims for different years. The upper part of the tables shows how an estimate of the total claims costs per claims year evolves annually. The lower section shows how large a share of this is presented in the balance sheet. More information on insurance liabilities in the risk management note 39.
If
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm < 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
At the close of the claims year 16,645 2,600 2,600 2,706 2,790 2,834 2,735 2,717 2,743 2,786 2,826
One year later 16,554 2,558 2,552 2,745 2,899 2,822 2,762 2,710 2,761 2,820
Two years later 16,529 2,504 2,526 2,692 2,895 2,837 2,763 2,718 2,749
Three years later 16,491 2,477 2,488 2,691 2,883 2,827 2,768 2,729
Four years later 16,358 2,456 2,470 2,685 2,856 2,796 2,773
Five years later 16,238 2,442 2,448 2,682 2,841 2,763
Six years later 16,227 2,424 2,446 2,667 2,819
Seven years later 16,227 2,430 2,420 2,660
Eight years later 16,339 2,412 2,408
Nine years later 16,288 2,392
Ten years later 16,267
Current estimate of total claims costs 16,267 2,392 2,408 2,660 2,819 2,763 2,773 2,729 2,749 2,820 2,826 43,207
Total disbursed 13,441 2,206 2,209 2,429 2,578 2,509 2,444 2,351 2,322 2,253 1,627 36,369
Provision reported in the balance sheet 2,826 186 199 231 241 254 329 378 427 567 1,199 6,838
of which established vested annuities 1,580 66 65 79 76 76 83 81 56 31 5 2,197
Provision for claims-adjustment costs 254
Total provision reported in the BS of If 7,092
Claims costs after reinsurance
Estimated claims cost
EURm < 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
At the close of the claims year 15,549 2,486 2,490 2,576 2,640 2,644 2,687 2,679 2,698 2,727 2,766
One year later 15,461 2,457 2,459 2,621 2,710 2,629 2,714 2,668 2,713 2,737
Two years later 15,407 2,405 2,431 2,580 2,698 2,645 2,717 2,660 2,697
Three years later 15,386 2,380 2,405 2,573 2,692 2,645 2,723 2,671
Four years later 15,277 2,362 2,389 2,571 2,663 2,619 2,726
Five years later 15,174 2,350 2,367 2,569 2,652 2,586
Six years later 15,169 2,332 2,365 2,553 2,629
Seven years later 15,180 2,339 2,342 2,544
Eight years later 15,280 2,322 2,331
Nine years later 15,225 2,302
Ten years later 15,210
Current estimate of total claims costs 15,210 2,302 2,331 2,544 2,629 2,586 2,726 2,671 2,697 2,737 2,766 41,199
Total disbursed 12,417 2,118 2,134 2,318 2,393 2,338 2,406 2,304 2,288 2,212 1,611 34,541
Provision reported in the balance sheet 2,793 184 196 226 235 249 320 367 410 525 1,154 6,659
of which established vested annuities 1,579 66 65 79 76 76 83 81 56 31 5 2,197
Provision for claims-adjustment costs 254
Total provision reported in the BS of If 6,912
Topdanmark
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm <2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
At the close of the claims year 881 904 915 968 862 1,014 894 886 869 796
One year later 907 877 918 987 865 1,042 902 898 866
Two years later 909 884 934 978 867 1,044 899 885
Three years later 925 884 930 977 860 1,040 893
Four years later 920 875 922 968 849 1,027
Five years later 905 876 915 962 847
Six years later 908 873 909 956
Seven years later 883 867 908
Eight years later 875 868
Nine years later 875
Current estimate of total claims costs 875 868 908 956 847 1,027 893 885 866 796 8,921
Total disbursed 812 808 830 870 745 899 739 704 630 411 7,449
Discounting 0 0 0 0 0 0 0 0 -1 -1 -3
Provision reported in the balance sheet 62 60 78 86 101 128 153 182 236 385 1,470
Discounting of previous years 278
Total provision reported in the BS of Topdanmark 1,748
Claims costs after reinsurance
Estimated claims cost
EURm <2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total
At the close of the claims year 836 858 858 828 810 858 841 830 807 771
One year later 864 832 864 842 819 868 846 842 810
Two years later 869 844 882 835 821 870 845 831
Three years later 886 846 880 833 815 866 838
Four years later 881 836 874 826 805 854
Five years later 866 838 866 820 802
Six years later 870 836 861 815
Seven years later 845 830 860
Eight years later 837 831
Nine years later 836
Current estimate of total claims costs 836 831 860 815 802 854 838 831 810 771 8,248
Total disbursed 775 772 782 729 703 730 690 664 589 403 6,838
Discounting 0 0 0 0 0 0 0 0 -1 -1 -3
Provision reported in the balance sheet 61 59 78 86 99 123 148 168 221 368 1,407
Discounting of previous years 278
Total provision reported in the BS of Topdanmark 1,685
Life insurance liabilities from insurance and investment contracts
2017 2016
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for unearned premiums
Insurance contracts 5,467 0 5,467 2,426 3 2,423
Investment contracts 2,324 - 2,324 28 - 28
Provision for claims outstanding 26 - 26 2,368 - 2,368
Total 7,817 0 7,817 4,821 3 4,818
Mandatum's liabilities related to assets held for sale -198 -210 -210
Group liabilities from insurance and investment contracts, total 7,618 0 7,618 4,611 3 4,608
Change in liabilities from insurance contracts
Gross Reinsurance
EURm Contracts with discretionary participation features Contracts with discretionary participation features Net
At 1 January 2017 4,794 - 4,794
Business acquisitions 3,258 - 3,258
Premiums 159 - 159
Claims paid -515 - -515
Expense charge -39 - -39
Guaranteed interest 153 - 153
Bonuses 1 - 1
Other -19 - -19
Total at 31 December 2017 7,791 - 7,791
Mandatum's liabilities related to assets held for sale -198
Life insurance liabilities from insurance contracts, total 7,592
Gross Reinsurance
EURm Contracts with discretionary participation features Contracts with discretionary participation features Net
At 1 January 2016 4,979 0 4,979
Premiums 149 - 149
Claims paid -470 - -470
Expense charge -37 - -37
Guaranteed interest 138 - 138
Bonuses 5 - 5
Other 29 -3 26
Total at 31 December 2016 4,794 -3 4,791
Mandatum's liabilities related to assets held for sale -210
Life insurance liabilities from insurance contracts, total 4,581
Life insurance liabilities from investment contracts
EURm 2017 2016
Investment contracts with discretionary participation feature 26 28
The change between financial years is mainly due to the claims paid.
Change in liabilities from life insurance investment contracts
EURm Contracts with discretionary participation features
At 1 January 2017 28
Claims paid -2
Other 1
Life insurance liabilities from investment contracts at 31 December 2017, total 26
EURm Contracts with discretionary participation features
At 1 January 2016 36
Other (includes i.e. conversions between different insurance classes) -8
Life insurance liabilities from investment contracts at 31 December 2016, total 28
The liabilities at 1 January and at 31 December include the future bonus reserves and the effect of the reserve for the decreased discount rate. The calculation is based on items before reinsurers' share. More details on the insurance liabilities are presented in the risk management note 39.
Investment contracts do not include a provision for claims outstanding.
Liability adequacy test does not give rise to supplementary claims.
Exemption allowed in IFRS 4 Insurance contracts has been applied to investment contracts with DPF or contracts with a right to trade-off for an investment contract with DPF. These investment contracts have been valued like insurance contracts.
Reconciliation to the consolidated insurance and investment contracts
EURm 2017
P&C insurance 11,281
Life insurance 7,618
Consolidated insurance and investment contracts, total 18,900
26 Liabilities from unit-linked insurance and investment contracts
Life insurance
EURm 2017 2016
Unit-linked insurance contracts 4,794 4,427
Unit-linked investment contracts 2,230 1,972
Life insurance liabilities 4,036 -
Total 11,060 6,399
Liabilities related to assets held for sale -3,100 -2,992
EURm
Group liabilities from unit-linked insurance and investment contracts, total 7,959 3,407
27 Financial liabilities
The segment financial liabilities include derivatives, debt securities and other financial liabilities.
If
EURm 2017 2016
Derivative financial instruments (note 14) 11 67
Subordinated debt securities
Subordinated loans Maturity Interest
Preferred capital note, 2011 (nominal value EURm 110) 30 years 6.00% 110 109
Preferred capital note, 2013 (nominal value EURm 90) perpetual 4.70% - 92
Preferred capital note, 2016 (nominal value 1,500 MSEK) 30 years 3 month Stibor + 2.25% 152 154
Preferred capital note, 2016 (nominal value 500 MSEK) 30 years 2.42% 51 52
Total subordinated debt securities 312 407
If, total financial liabilities 322 474
The loan 2011 was issued with fixed interest rates for the first ten years, after which it becomes subject to variable interest rates. The subordinated loan issued in 2013 has a fixed interest rate for the first 5.5 years afther which it becomes subject to variable interest rates. At the point of change, there is the possibility of redemption for all the loans.
The loan 2013 was prematurely repaid in September 2017.
The loan of 1,500 MSEK issued in 2016 is issued with variable interest rate terms. After ten years the margin is increased by one percentage point. It includes terms stating the right of redemption after five years and at any interest payment date thereafter.
The loan of 500 MSEK issued in 2016 is issued with fixed interest rate terms for the first five years. After that period, the loan becomes subject to variable interest rate but it also includes terms stating the right of redemption at this point in time or at any interest payment date thereafter.
All the loans are listed on the Luxembourg Exchange.
The purpose of the loans is to secure the good financial standing. All loans and their terms are approved by supervisory authorities and they are utilised for solvency purposes.
Topdanmark
EURm 2017 2016
Derivative financial instruments (note 14) 69 -
Subordinated debt securities
Subordinated loans Maturity Interest
Preferred capital note, 2017 (nominal value 400 MDKK) bullet 3 month Cibor + 2.75% 53 -
Preferred capital note, 2015 (nominal value 500 MDKK) 12/2025 2.92% until 2020 67 -
Preferred capital note, 2015 (nominal value 850 MDKK) 06/2026 3 month Cibor +270 bp 114 -
Total subordinated debt securities 234 -
Topdanmark, total financial liabilities 303 -
Subordinated loans are wholly included in Topdanmark's own funds.
Mandatum
EURm 2017 2016
Derivative financial instruments (note 14) 6 11
Subordinated debt securities
Subordinated loans 100 100
Mandatum, total financial liabilities 106 111
Mandatum Life issued in 2002 EURm 100 Capital Notes. The loan is perpetual and pays floating rate interest. The interest is payable only from distributable capital. The loan is repayable only with the consent of the Insurance Supervisory Authority and at the earliest on 2012 or any interest payment date after that. The loans is wholly subscribed by Sampo Plc.
Holding
EURm 2017 2016
Derivative financial instruments (note 14) 10 3
Debt securities in issue
Commercial papers 293 671
Bonds *) 2,884 2,877
Total 3,177 3,548
Holding, total financial liabilities 3,187 3,551
*) The determination and hierarchy of financial assets and liabilities at fair value is disclosed in note 17. Based on the principles of this determination, the bonds of the Holding Company fall under level 2.
Elimination items between segments -269 -289
EURm
Group, total financial liabilities 3,649 3,847
Change in liabilities from financing activities
EURm 1.1.2017 Cash flows Exchange differences Other 31.12.2017
Commercial papers 671 -378 - 0 293
Bonds 2,877 25.1 -16 -2 2,884
Total liabilities from financing activities 3,548 -353 -16 -2 3,177
EURm 1.1.2016 Cash flows Exchange differences Other 31.12.2016
Commercial papers 305 366 - 0 671
Bonds 1,997 903 -21 -3 2,877
Total liabilities from financing activities 2,302 1,269 -21 -2 3,548
28 Provisions
EURm 2017
At 1 January 2017 35
Exchange rate differences -1
Additions 6
Amounts used during the period -7
Unused amounts reversed during the period -1
At 31 December 2017 33
Current (less than 1 year) 7
Non-current (more than 1 year) 26
Total 33
EURm 9 (11) of the provision consist of assets reserved for the development of efficient administrative and claims-adjustment processes and structural changes in distribution channels result in organisational changes that affect all business areas. In addition, the item includes a provision of about EURm 24 (21) for law suits and other uncertain liabilities.
29 Employee benefits
Employee benefits
Sampo has defined benefit plans in P&C insurance business in Sweden and Norway.
In addition to statutory retirement pension insurance, the Group has certain voluntary defined benefit plans. The voluntary defined benefit plans are intra-Group and included in the insurance liabilities of Mandatum Life. The amount is negligible and they have no material impact on the Group profit or loss or equity.
Employee benefit obligations of If
EURm 2017 2016
Present value of estimated pension obligation, including social costs 268 294
Fair value of plan assets 211 214
Net pension obligation recognised in the balance sheet 57 79
The main Swedish defined-benefit pension plan is closed to new employees born in 1972 or later. The corresponding Norwegian pension plan consists solely of active people employed prior to 2006 and born 1957 and earlier.
For both countries, the pension benefits referred to are old-age pension and survivors’ pension. A common feature of the defined-benefit plans is that the employees and survivors encompassed by the plans are entitled to a guaranteed pension that depends on the employees’ service period and pensionable salary at the time of retirement. The dominating benefit is the old-age pension, which refers in part to temporary pension before the anticipated retirement age and in part to a life-long pension after the anticipated retirement age.
The retirement age for receiving premature pension is normally 62 years in Sweden and normally 65 years in Norway. In Sweden, premature old-age pension following a complete service period is payable at a rate of approximately 65% of the pensionable salary and applies to all employees born in 1955 or earlier and who were covered by the insurance sector’s collective bargaining agreement of 2006. In Norway, premature old-age pension following a complete service period is payable at a rate of approximately 70% of the pensionable salary and applies to all employees born in 1957 or earlier and who were employed by If in 2013.
The anticipated retirement age in connection with life-long pension is 65 years for Sweden and 67 years for Norway. In Sweden, life-long old-age pension following a complete service period is payable at a rate of 10% of the pensionable salary between 0 and 7.5 income base amounts, 65% of salary between 7.5 and 20 income base amounts and 32.5% between 20 and 30 income base amounts. In Norway, life-long old-age pension following a complete service period is payable at a rate of 70% of the pensionable salary up to 12 National Insurance base amounts, together with the estimated statutory old-age pension. Paid-up policies and pension payments from the Swedish plans are normally indexed upwards in an amount corresponding to the change in the consumer price index. However, there is no agreement guaranteeing the value and future supplements in addition to the contractual pension benefit could either rise or fall. If is not responsible for indexation of paid-up policies and/or pension payments from the Norwegian insured plans.
The pensions are primarily funded through insurance whereby the insurers establish the premiums and disburse the benefits. If’s obligation is primarily fulfilled through payment of the premiums. Should the assets that are attributable to the pension benefits not be sufficient to enable the insurers to cover the guaranteed pension benefits, If could be forced to pay supplementary insurance premiums or secure the pension obligations in some other way. In addition to insured pension plans, there are also unfunded pension benefits in Norway for which If is responsible for ongoing payment.
To cover the insured pension benefits, the related capital is managed as part of the insurers’ management portfolios. In such management, the characteristics of the investment assets are analyzed in relation to the characteristics of the obligations, in a process known as Asset Liability Management. New and existing asset categories are evaluated continuously in order to diversify the asset portfolios with a view to optimizing the anticipated risk-adjusted return. Any surplus that arises from management of the assets normally accrues to If and/or the insured and there is no form of transfer of the asset value to other members of the insurance collective.
The insurers and If are jointly responsible for monitoring the pension plans, including investment decisions and contributions. The pension plans are essentially exposed to similar material risks regarding the final amount of the benefits, the investment risk associated with the plan assets and the fact that the choice of discount interest rate affects their valuation in the financial statements.
When applying IAS 19, the pension obligations are calculated, as is the pension cost attributable to the fiscal period, using actuarial methods. Pension rights are considered to have been vested straight line during the service period. The calculation of pension obligations is based on future anticipated pension payments and includes assumptions regarding mortality, employee turnover and salary growth. The nominally calculated obligation is discounted to the present value using interest rates based on the extrapolated yield-curves in Sweden and in Norway for AAA and AA corporate bonds, including mortgage-backed bonds, as at 30 November, approximately updated to reflect market conditions mid-December. The discount rate chosen takes into account the duration of the company’s pension obligations. After a deduction for the plan assets, a net asset or net liability is recognized in the balance sheet.
The following tables contain a number of material assumptions, specifications of pension costs, assets and liabilities and a sensitivity analysis showing the potential effect on the obligations of reasonable changes in those assumptions as at the end of the fiscal year.
The carrying amounts have been stated including special payroll tax in Sweden (24.26%) and a corresponding fee in Norway (14.1%-19.1%).
2017 2016
Sweden Norway Total Sweden Norway Total
Recognised in income statement and other comprehensive income
Current service cost 6 2 8 5 4 9
Past service cost - - 0 0 -7 -6
Interest expense on net pension liability 1 1 2 1 1 2
Total in income statement 6 3 9 7 -2 5
Remeasurement of the net pension liability -9 4 -5 8 -2 6
Total in comprehensive income statement -3 8 5 15 -4 11
Recognised in balance sheet
Present value of estimated pension liability, including social costs 199 69 268 206 87 294
Fair value of plan assets 177 35 211 166 49 214
Net liability recognised in balance sheet 22 35 57 41 39 79
2017 2016
Distribution by asset class Sweden Norway Sweden Norway
Debt instruments, level 1 39% 52% 39% 54%
Debt instruments, level 2 0% 13% 0% 13%
Equity instruments, level 1 27% 11% 28% 6%
Equity instruments, level 3 10% 2% 10% 3%
Property, level 3 11% 14% 11% 12%
Other, level 1 0% 6% 2% 9%
Other, level 2 7% 2% 6% 3%
Other, level 3 5% 0% 4% 0%
The following actuarial assumptions have been used for the calculation of defined benefit pension plans in Norway and Sweden:
Sweden Sweden Norway Norway
31.12.2017 31.12.2016 31.12.2017 31.12.2016
Discount rate 2.75% 2.75% 2.50% 2.75%
Future salary increases 2.75% 2.75% 3.00% 3.00%
Price inflation 1.75% 1.75% 2.00% 2.00%
Mortality table FFFS 2007:31 +1 year FFFS 2007:31 +1 year K2013 K2013
Average duration of pension liabilities 21 years 21 years 13 years 13 years
Expected contributions to the defined benefit plans during 2018 and 2017 9 9 3 3
2017 2016
Sensitivity analysis of effect of reasonably possible changes Sweden Norway Total Sweden Norway Total
Discount rate, +0,50% -24 -5 -28 -25 -6 -31
Discount rate, -0,50% 27 5 32 28 6 35
Future salary increases, +0,25% 7 1 8 8 1 9
Future salary increases, -0,25% -7 -1 -7 -8 -1 -8
Expected longevity, +1 year 8 2 10 8 2 10
2017 2016
EURm Funded plans Unfunded plans Total Funded plans Unfunded plans Total
Analysis of the employee benefit obligation
Present value of estimated pension liability, including social costs 239 29 268 260 33 294
Fair value of plan assets 211 - 211 214 - 214
Net pension liability recognised in the balance sheet 28 29 57 46 33 79
Analysis of the change in net liability recognised in the balance sheet
EURm 2017 2016
Pension liabilities:
At the beginning of the year 294 303
Earned during the financial year 8 9
Costs pertaining to prior-year service - -6
Interest cost 8 8
Actuarial gains (-)/losses (+) on financial assumptions 1 8
Actuarial gains (-)/losses (+), experience adjustments -2 2
Exchange differences on foreign plans -12 -2
Benefits paid -28 -22
Settlements - -7
Defined benefit plans at 31 Dec. 268 294
Reconciliation of plan assets:
At the beginning of the year 214 213
Interest income 6 6
Difference between actual return and calculated interest income 5 5
Contributions paid 16 16
Exchange differences on foreign plans -8 -3
Benefits paid -22 -14
Settlements - -7
Plan assets at 31 Dec. 211 214
Other short-term employee benefits
There are other short-term staff incentive programmes in the Group, the terms of which vary according to country, business area or company. Benefits are recognised in the profit or loss for the year they arise from. An estimated amount of these short-term incentives, social security costs included, for 2017 is EURm 68.
30 Other liabilities
EURm 2017 2016
Liabilities arising out of direct insurance operations 264 207
Liabilities arising out of reinsurance operations 44 34
Liabilities related to Patient Insurance Pool 112 118
Tax liabilities 185 114
Premium taxes 50 49
Liability for dividend distribution - 38
Settlement liabilities 63 31
Interests 17 27
Prepayments and accrued income 266 171
Other 258 146
Group other liabilities, total 1,258 933
Item Other includes e.g. witholding taxes, social expenses related to Workers Compensation insurance policies and employee benefits and unpaid premium taxes.
The non-current share of other liabilities is EURm 97 (96).
31 Contingent liabilities and commitments
EURm 2017 2016
Off-balance sheet items
Guarantees 992 4
Investment commitments 3 657
IT acquisitions 2 2
Other irrevocable commitments 106 15
Total 1,103 677
Assets pledged as collateral for liabilities or contingent liabilities
2017 2016
EURm Assets pledged Liabilities/ commitments Assets pledged Liabilities/ commitments
Assets pledged as collateral
Investments
- Investment securities 218 129 231 147
EURm 2017 2016
Assets pledged as security for derivative contracts, carrying value
Investment securities 15 34
Cash and cash equivalents 85 -
The pledged assets are included in the balance sheet item Other assets or Cash and cash equivalents.
EURm 2017 2016
Commitments for non-cancellable operating leases
Minimum lease payments
not later than one year 32 34
later than one year and not later than five years 105 114
later than five years 54 52
Total 191 200
Lease and sublease payments recognised as an expense in the period
- minimum lease payments -37 -37
- sublease payments 0 0
Total -37 -37
The contracts have been made mainly for 3 to 10 years.
EURm 2017 2016
Other contingent liabilities
Contract liabilities 82 -
Adjustments to VAT liabilities 11 -
Other liabilities 3 -
Other contingent liabilities belong to Topdanmark.
The subsidiary If P&C Insurance Ltd provides insurance with mutual undertakings within the Nordic Nuclear Insurance Pool, Norwegian Natural Perils’ Pool and the Dutch Terror Pool.
In connection with the transfer of property and casualty insurance business from the Skandia group to the If Group as of March 1, 1999, If P&C Holding Ltd and If P&C Insurance Ltd issued a guarantee for the benefit of Försäkringsaktiebolaget Skandia (publ.) whereby the aforementioned companies in the If Group mutually guarantee that companies in the Skandia group will be indemnified against any claims or actions due to guarantees or similar commitments made by companies in the Skandia group within the property and casualty insurance business transferred to the If Group.
If P&C Insurance Holding Ltd and If P&C Insurance Ltd have separately entered into contracts with Försäkringsaktiebolaget Skandia (publ.) and Tryg-Baltica Forsikrings AS whereby Skandia and Tryg-Baltica will be indemnified against any claims attributable to guarantees issued by Försäkringsaktiebolaget Skandia (publ.) and Vesta Forsikring AS, on behalf of Skandia Marine Insurance Company (U.K.) Ltd. (now Marlon Insurance Company Ltd.) in favor of the Institute of London Underwriters. Marlon Insurance Company Ltd. was disposed during 2007, and the purchaser issued a guarantee in favour of If for the full amount that If may be required to pay under these guarantees.
If P&C Insurance Company Ltd has outstanding commitments to private equity funds totalling EURm 11, which is the maximum amount that the company has committed to invest in the funds. Capital will be called to these funds over several years as the funds make investments.
With respect to certain IT systems If and Sampo use jointly, If P&C Insurance Holding Ltd has undertaken to indemnify Sampo for any costs caused by It that Sampo may incur in relation to the owners of the systems.
Sampo Group's Danish companies and Topdanmark Group's companies are jointly taxed, with Topdanmark A/S being the management company. Pursuant to the specific rules on corporation taxes etc. in the Danish Companies Act, the companies are liable for the jointly taxed companies and for any obligations to withhold tax from interests, royalties and dividend for companies concerned.
Topdanmark EDB II ApS has entered into a contract with Keylane A/S on procurement and implementation of a new administration system for Topdanmark Life insurance. In connection with the implementation, Topdanmark Livsforsikring A/S has undertaken to give support in fulfilling Topdanmark EDB II ApS' obligations in accordance with the contract with Keylane A/S.
32 Equity and reserves
Equity
EURm 2017 2016
1 January 560,000 560,000
Cancellation of shares on the joint-book entry -4,648 -
31 December 555,352 560,000
At the end of the financial year, the mother company or other Group companies held no shares in the parent company.
Reserves and retained earnings
Legal reserve
The legal reserve comprises the amounts to be transferred from the distributable equity according to the articles of association or on the basis of the decision of the AGM.
Invested unrestricted equity
The reserve includes other investments of equity nature, as well as issue price of shares to an extent it is not recorded in share capital by an express decision.
Other components of equity
Other components of equity include fair value changes of financial assets available for sale and derivatives used in cash flow hedges, and exchange differences.

Changes in the reserves and retained earnings are presented in the Group's statement of changes in equity.
33 Related party disclosures
Key management personnel
The key management personnel in Sampo Group consists of the members of the Board of Directors of Sampo plc and Sampo Group’s Executive Committee, and the entities over which the members of the key management personnel have a control.
Key management compensation
EURm 2017 2016
Short-term employee benefits 9 9
Post employment benefits 3 2
Other long-term benefits 7 14
Total 19 26
Short-term employee benefits comprise salaries and other short-terms benefits, including profit-sharing bonuses accounted for for the year, and social security costs.
Post employment benefits include pension benefits under the Employees’ Pensions Act (TyEL) in Finland and voluntary supplementary pension benefits.
Other long-term benefits consist of the benefits under long-term incentive schemes accounted for for the year (see Note 34).
Related party transactions of the key management
The key management does not have any loans from the Group companies.
Associates
Outstanding balances with related parties/Associate Nordea
EURm 2017 2016
Assets 1,948 2,500
Liabilities 72 90
The Group's receivables from Nordea coprise mainly long-term investments in bonds and deposits. In addition, the Group has several on-going derivative contracts related to the Group's risk management of investments and liabilities.
34 Incentive schemes
Long-term incentive schemes 2011 I - 2017 I
The Board of Directors of Sampo plc has decided on the long-term incentive schemes 2011 I - 2017 I for the management and key employees of Sampo Group. The Board has authorised the CEO to decide who will be included in the scheme, as well as the number of calculated incentive units granted for each individual used in determining the amount of the incentive reward. In the schemes, the number of calculated incentive units granted for the members of the Group Executive Committee is decided by the Board of Directors. Some 130 persons were included in the schemes at the end of year 2017.
The amount of the performance-related bonus is based on the value performance of Sampo's A share and on the insurance margin (IM) and on Sampo's return on the risk adjusted capital (RoCaR). The value of one calculated incentive unit is the trade-weighted average price of Sampo's A-share at the time period specified in the terms of the scheme, and reduced by the starting price adjusted with the dividends per share distributed up to the payment date. The pre-dividend starting prices vary between eur 39.07 - 43.81. The maximum value of one incentive unit varies between eur 33.37 - 62.81, reduced by the dividend-adjusted starting price. In all the schemes, the incentive reward depends on two benchmarks. If the IM is 6 per cent or more, the IM-based reward is paid in full. If the IM is between 4 - 5.99 per cent, half of the incentive reward is paid. No IM-related reward will be paid out, if the IM stays below these. In addition, the return on the risk adjusted capital is taken into account. If the return is at least risk free return + 4 per cent, the RORAC-based incentive reward is paid out in full. If the return is risk free return + 2 per cent, but less than risk free return + 4 percent, the payout is 50 per cent. If the return stays below these benchmarks, no RORAC-based reward will be paid out.
Each plan has three performance periods and incentive rewards are settled in cash in three installments. The employee shall authorise Sampo plc to buy Sampo's A-shares with 50 per cent (scheme 2017 I) or 60 percent (schemes 2014 and 2011 I) of the amount of the reward after taxes and other comparable charges. The shares are subject to transfer restrictions for three years from the day of payout. A premature payment of the reward may occur in the event of changes in the group structure or in the case of employment termination on specifically determined bases. The fair value of the incentive schemes is estimated by using the Black-Scholes pricing model.
2011 I/2 2014 I 2014 I/2 2017 I
Terms approved *) 14/09/2011 17/09/2014 17/09/2014 14/09/2017
Granted (1,000) 31 Dec. 2014 100 4,434 - -
Granted (1,000) 31 Dec. 2015 70 4,380 62 -
Granted (1,000) 31 Dec. 2016 35 4,211 62 -
Granted (1,000) 31 Dec. 2017 0 2,874 62 4,092
End of performance period I 30 % Q2-2015 Q2-2017 Q2-2018 Q2-2020
End of performance period II 35 % Q2-2016 Q2-2018 Q2-2019 Q2-2021
End of performance period III 35 % Q2-2017 Q2-2019 Q2-2020 Q2-2022
Payment I 30 % 9-2015 9-2017 9-2018 9-2020
Payment II 35 % 9-2016 9-2018 9-2019 9-2021
Payment III 35 % 9-2017 9-2019 9-2020 9-2022
Price of Sampo A at terms approval date *) 18.10 37.22 37.22 44.02
Starting price **) 24.07 38.26 43.38 43.81
Dividend-adjusted starting price at 31 December 2017 16.97 31.86 38.93 43.81
Sampo A closing price at 31 December 2016 45.80
Total intrinsic value, meur 0 29 0 2
Total debt 30
Total cost for the financial period, EURm (incl. social costs) 28
*) Grant dates vary
**) Trade-weighted average for ten trading days from the approval of terms
Long-term incentive scheme of Topdanmark
Topdanmark's share option scheme is for its Executive Board and senior executives. The strike price has been fixed at 110% of the market price on the last trading date in the prior financial year (average of all trades). The options may be exercised 3-5 years subsequent to the granting. The scheme is settled by shares.
The option scheme requires employment during the whole year of the allocation. Options are allocated at beginning of year and in connection with resignation in the year of allocation a proportional deduction in the number of allocated options is made.
Strike price Executive board Senior executives Resigned Total
Total number of options (1,000)
At 1 January 2017 339 1,179 265 1,701
Granted 26 96 352 0 407
Transferred -112 -15 127 0
Exercised -131 -530 -126 -326
At 31 December 2017 192 986 266 1,783
Average strike price at 31 December 2017 26 27 26 27
Per granting
2013, exercise period January 2016 - 2018 18 0 12 18 30
2014, exercise period January 2017 - 2019 21 50 94 52 195
2015, exercise period January 2018 - 2020 30 39 249 75 363
2016, exercise period January 2019 - 2021 29 41 291 75 407
2017, exercise period January 2020 - 2022 26 62 341 46 448
At 31 December 2017 192 986 266 1,444
Average strike price exercised options 2017 17 19 18 18
Average market price on date of exercise 2017 28
Fair value of granting 2017 0 1 1
Fair value at 31 December 2017 2 9 3 14
The fair value of the granting for the year has been calculated using the Black and Scholes model assuming a share price of EUR 24. The interest rate corresponds to the zero coupon rate based on the swap curve on 31 December of the previous year. Future volatility is assumed to be 22% and the average life of the options approximately 4 years.
At 31 December 2017, there were 225,000 options which could be exercised.
35 Assets and liabilities related to assets held for sale
In October 2016, Mandatum Life Insurance Company announced that it will not continue the distribution agreement of insurance policies with Danske Bank Plc after 31 December 2016 and that it will use its right to sell the insurance portfolio acquired via Danske Bank to Danske Bank A/S. As a result of the valuation process the value of the insurance portfolio as at the 31 December 2016 is EUR 334 million. The theoretical result from the beginning of 2017 until the date of the transfer as determined in the valuation process will be deducted from the final sales price. This theoretical result for year 2017 is determined to be EUR 18.1 million and for year 2018 EUR 18.6 million. The actual result produced by the portfolio until the transfer remains with Mandatum Life. After the transfer has been completed the transaction is expected to have a negative impact of EUR 20 - 25 million on Mandatum Life's annual profit before taxes. As a result of the transaction rises a gross sales gain equalling the value of the insurance portfolio adjusted with the items above. In Sampo Group's consolidated accounts the goodwill of approximately EUR 75 million related to assets held for sale will be deducted from the sales gain. The transfer of the portfolio is expected to take place during 2018.
The insurance porfolio targeted in the agreement is mainly included in the "Unit-linked contracts" segment. Assets and liabilities are valued at book value. The effect of the with profit insurance portfolio on the investment result in the "Other contracts" segment is deemed insignificant. The insurance risk result in the "Other contrats" segment also consists mainly of other insurance portfolio than that targeted in the agreement. The effect of the transfer of the insurance portflio is expected to weaken the result significantly and this will mainly show in the "Unit-linked contract" segment. The premium income of the insurance porflio in 2017 was EUR 204 and claims cost EUR 252.
Assets and liabilities of the portfolio at 31 December 2017
Assets
Financial assets 198
Investments related to unit-linked insurance contracts 3,100
Goodwill 75
Total 3,374
Liabilities
Liabilities for insurance and investment contracts 198
Liabilities for unit-linked insurance and investment contracts 3,100
Total 3,299
36 Auditors' fees
EURm 2017 2016
Auditing fees -3 -2
Ernst & Young -2 -2
Other 0 -
Other fees 0 0
Ernst & Young 0 0
Other 0 -
Total -3 -3
37 Legal proceedings
There are a number of legal proceedings against the Group companies outstanding on 31 Dec. 2017, arising in the ordinary course of business. The companies estimate it unlikely that any significant loss will arise from these proceedings.
38 Investments in subsidiaries
Name Group holding % Carrying amount
If P&C Insurance Holding Ltd 100 1,886
If P&C Insurance Ltd 100 1,678
If P&C Insurance AS 100 45
Support Services AS 100 0
If Livförsäkring Ab 100 7
Nordic Assistance AB 100 1
Topdanmark A/S 49.09 1,398
Topdanmark Kapitalforvaltning A/S 100 16
Topdanmark Forsikring A/S 100 860
Topdanmark Liv Holding A/S 100 267
Topdanmark Livsforsikring A/S 100 455
Topdanmark Ejendom A/S 100 334
Nykredit Livsforsikring 100 17
Mandatum Life Insurance Company Ltd 100 484
Mandatum Life Services Ltd 100 4
Mandatum Life Investment Services Ltd 100 2
Saka Hallikiinteistöt GP Oy 100 0
Mandatum Life Vuokratontit I GP Oy 100 0
Mandatum Life Fund Management S.A. 100 1
Mandatum Life Insurance Baltic SE 100 11
If IT Services A/S 100 0
Sampo Capital Oy 100 1
The table excludes property and housing companies accounted for in the consolidated accounts.
40 Events after the balance sheet date
In the meeting of 7 Feb. 2018, the Board of Directors decided to propose at the Annual General Meeting on 19 April 2018 a dividend distribution of EUR 2.60 per share, or total EUR 1.443.914.810, for 2017. The dividends to be paid will be accounted for in the equity in 2018 as a deduction of retained earnings.