Mandatum Oyj (MANTA) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to this investor introduction to Mandatum. My name is Sami Taipalus, and I am Head of Investor Relations at Sampo Group. On the agenda today, we are going to go through Mandatum's business model and medium-term financial targets ahead of the planned listing on the 2nd of October. The event will feature presentations from management as well as 2 Q&A sessions in which you'll be able to participate, both live here in the room and online via question boxes. [Operator Instructions] The event today will be recorded, and the recording will later be available on sampo.com. With that, I hand over to our first speaker, Mr. Patrick Vetelainen, Chair of the -- Lapvetelainen, apologies, Chair of the Mandatum Board.

So good afternoon, everyone. We would like to welcome you to the Mandatum's first ever investor event. We appreciate that you are taking the time to join us today, and I'm glad to see you, so many attending both in person and also virtually online. For those who don't know, my name is Patrick Lapvetelainen. And currently, I'm the Chief Investment Officer of Sampo for the next 2 weeks. Then I will be moving over to Mandatum to become the full-time Chair of the Board when the demerger is completed. Myself, I have a long history with Mandatum. I have been on the Board of Directors since 2002, and I've been responsible for our with-profit investments since then also. But before we dive into the Mandatum business, just a glance and a short recap of the demerger process and why we stand here today. Background of the demerger. So as you surely know, goes back to 2020 when Sampo made the strategic decision to concentrate on property and casualty insurance. Since then, Sampo has acquired 100% of Hastings, U.K.-based P&C operator, and divested the entire stake in Nordea Bank. After these 2 transactions, it became quite obvious, of course, that Mandatum's business does not fit into the long-term P&C insurance strategy of Sampo. And therefore, the Board initiated a strategic review back in December last year to look at the strategic alternatives for Mandatum. After the strategic review, the Board decided to announce in the end of the March an intention to demerge Mandatum from Sampo as the Board's assessment was that Sampo and Mandatum would create more value to shareholders as independent listed companies. Sampo AGM approved the demerger in May and the final decisions by Sampo Board was made yesterday. The demerger will be effective as 1st of October. And the first trading day on the Helsinki Stock Exchange will be on Monday, the 2nd of October. And the ticker will hopefully be MANTA.HE. Sampo and Mandatum do not have any significant synergies, and Mandatum has always operated as an independent company from Sampo. Demerging of the operations are not expected to be difficult, and we have prepared and planned for this already for a long time. And timing-wise, we think this is a perfect moment for Mandatum to go its own road and as an independent company and continue to execute on its growth strategy. Okay. That's about the demerger. Let's jump in today's business and presentations then. Mandatum is one of the leading financial services in Finland across life insurance and asset management. And we are excited to be here and walk you through today our business model, what we have achieved so far, and where we see our strategic focus going forward. Mandatum's today's business proposition consist of 2 different businesses, the capital-light unit-linked insurance and asset management offering that's in the growth mode and then the with-profit business that's in runoff and releasing capital. I would like to highlight here on this slide 3 core strength or takeaways, we believe, that are important and stand out. Proven foundation. That means that we have executed a strategy for over 20 years where we have shifted from business from capital-heavy into capital-light with an excellent track record, built a strong brand in unit-linked insurance and asset management, and also built a very strong management team. We have a clear growth path on our capital-light offering based on our proprietary distribution capabilities. And last but not least, our balance sheet and solvency is very strong, and we will generate capital and return that to our shareholders. So all in all, I'm convinced that Mandatum will thrive independently given the opportunities we see ahead of us. And hopefully, our presentations today proves it also. And with that, just a brief few words on our team. As you can see here, we have a very experienced management team, and we have been doing this for a long time. We are all present here today, and are available then in the Q&A sessions. So thank you. This was the opening remarks from me. And now I will leave it over to Petri, please.

Thank you, Pat. Welcome on my behalf also, it's nice to be here. Once again, I haven't been in Investment Days or Capital Market Days for many, many years. I remember when we have this banking operation in Sampo Group and those time, we have a lot of investors meeting. But since then, it has been more quiet. So it's really nice to be here today and present our figures to you. As you saw, my name is Petri Niemisvirta, I'm CEO of the Mandatum. And like Pat said, a long period of time here in Mandatum and Sampo Life and so on, companies before Mandatum. So this is exciting times ahead of us to be as an independent listed company, which hasn't happened before. So a few numbers. I will not go through all the numbers in my slides. There's tons of these numbers, and I will try to describe the main takeaways on each slide. And you can ask at Q&A session more if you want to go deeper with certain numbers and any issues on my slides. What I'm really proud of is our EUR 11.2 billion customers' assets under management, which was the number after first 6 months in this year. What is really good is this number, close to that is EUR 1.4 billion cumulative client net flows, so inflows and outflows and net of that. And so in '21 to H1 '23, EUR 1.4 billion. I will touch these issues later. I have another picture of that. So increasing speed of collecting money. We are an asset-gathering business really with the different tools we have. And we have been, I guess, quite successful lately and, of course, over 15 years collecting money and also keeping the money and creating huge really good NPS and customer satisfaction over the years. So what is Mandatum? How we do our business? We really have 2 different business areas and those are totally different. As Pat mentioned, we already ended our with-profit business more than 20 years ago. I was nominated as a CEO 2001, and one of the first things we did on that time was merger with Sampo and Mandatum, old Mandatum. At that time, we stopped to sell any more with-profit. As you -- some of you might know all, it takes years and years to stop with-profit growing. And -- but we are the few -- a few of those companies in Europe, really, I guess, who has managed to stop this. And really not just to stop this, we have managed to decrease the liability on that side. As you can see, since 2014, 52% down, with-profit from EUR 5.1 billion to EUR 2.4 billion after 6 months this year. So very predictable with-profit book and a lot of capital releases ahead of us. What we have said, what we have forecasted when it comes to with-profit, more or less, we have keep our promises and our forecasting has been very accurate in the past. And we believe that there are no changes on that side as well. So we believe there will be a lot of capital releases going forward as it has been in the past. So at the same time, what we have done during the last 15 years, especially of more than 20 years, at the same time, we have put a lot of effort to increase our capital-light business. And we do that capital-light business in 3 different divisions or backbone. Our traditional backbone in our business is corporate. I will tell more in coming slides how we do our business in corporate, why it's so important to us, why it's so important, our growth, when we talk about also the institutional wealth management side. Unit-linked liabilities, since 2014, from EUR 5.3 billion to EUR 10.8 billion. The highest growth rate has been in a wealth management side. How is the Finnish market? What kind of market we are doing our business? Mandatum is mainly, at this point, a Finnish company. Most of our revenues, most of our profit, most of our customers are in Finland. So it's important to understand where we stand when it comes to market as well. So the wealth management and unit-linked capital-light business area has been growing since 2008, past 15 years, more or less, 15% annually. So double-digit numbers, so very good growth. At the same time, all policies in unit-linked -- in life insurance industry, only 5% growth. So the capital-light unit-linked business is what is really growing and what the companies are doing. At the same time, Finnish institution, meaning fund management companies, asset management companies, market estimation is EUR 180 billion totally, 9% growth totally. So even though Finnish economy is not that flying recently since 15 years, asset management, wealth management, capital-light type of business is growing. It has been growing. And there's a lot of things which says that it will continue. We haven't seen any softening of market or hindrance that Finns will be richer, more wealthy. We have a huge amount of, let's say, large generations, very old now, which is creating some problems to society. But they are -- they will left a lot of properties and assets today their children going forward. So there will be more wealthy people in the future in Finland as well. So we see that Finland as a good market. And coming slides, I will also show that we are not just looking Finland, we are also expanding our institutional asset management and wealth management business outside of Finland, mainly Nordics in Denmark and Sweden. How -- what is our position then? 2017, 21% market share. Now after 6 years or 5 years, 32%, so 11 basis points up. First time ever, we are the largest life insurance company in Finland, bigger than Nordea Life or OP Life. As you can see, this is very consolidated market, so there is no consolidation coming in the future on this side. This is the 4 biggest players. They hold like 90% of the market. So this is -- but we are well positioned in the Finnish life insurance market as well in asset management market and wealth management market. Some other numbers. Our position in corporate life insurance market, we hold, let's say, almost half of the unit-linked group pension business in Finland. So every second policy is underwritten by us, so we are the largest one. And corporate risk life, 1/3 is our market share on that side. So as well, it's a good position on that side. So overall, our corporate market position is very strong. And it creates us opportunities to enhance our wealth management business as well. So what are these divisions? How we are doing our business and how we can describe them? As I said, corporate business is our backbone. It's our heritage. Most of our customers and customers' base is coming also on wealth management side from our corporate relations. As you can see, 70% of our wealth management customers, they have some kind of connections to our corporate business. As we all know, the wealth is created in companies and corporates. Either you get a lot of salary, bonuses, LTIs, STIs or you sell your company or you have other ways to make wealth through your companies. So that's the way, we have known this already 15 years ago. This is the way to go. We have extremely good relations to corporate leaders, decision-makers, wealthy people on that side, and we should enhance our business to wealth management side. So how we are planning to go forward is to keep our market position on corporate side. There's still room to grow on that side as well, especially in certain areas like remuneration and personnel funds and so on. But the main thing is to keep the existing really good market position and feed our growth engine, which is our institutional and wealth management area. So the feed and shift to customers more and more not just to be the corporate customer, also to be our wealth management customer. Corporate, it's important part of our business as well, and it's profitable as well. It's not just a feeder. It's important to understand that in Finnish market, corporate business is totally different, I guess, in any other European market. One thing which makes us different, the market different, is that this is really sticky money. Once we do new unit-linked group pension policy, by nature, it's sticky. The money keep -- stays with us because you can't transfer your assets to another life insurance company. That's very normal in all other Nordics and also all over the Europe. So that is very important to understand that once customers, they have paid to us, they will get their money out once they get their pensions. So there is no transfer market in Finland in that sense. Institutional and wealth management, that's a really good market position. Lauri will touch this issue more. Scale up platform and expand product offering, those are the things. And one thing I will touch later on is repeat Finnish success story in Sweden and Denmark. We have already some evidence that we can do that more in the future. And when it comes to our retail, Danske cooperation is really, really something we appreciate. And it's very efficient operation, and it's creating value for both of the parties, so to Danske Bank and us as well. So a few more words about our corporate business, which is our backbone for our growth. We have unique setup how we do our business. We do have something like 20,000 corporate customers in our corporate segment. We are very cautious which kind of companies we are pushing our sales efforts. So we use a lot of data in order to use our resources, sales resources right way. And we offer pension policies which all are unit-linked, so we don't offer any with-profit policies, group risk life policies and personnel funds and reward and compensation advisory, our remuneration business. And we are acting from the largest Finnish companies, the smaller ones as well. So -- and that unique setup, there is no like this in Finland. So no other player in the market really can say they have all these, not the big banks or life insurance company. They don't have this whole package. For example, the remuneration and reward in compensation side, we have the largest offering for corporate customers. And of course, this has created a very active, proactive way to do things with corporates that we have extremely high NPS among our customers, which is, of course, is the one of the reasons why we have so good net flow. There's a very small outflow from our policies. So 86, 84, increased a lot since 2018, for example. And this is just the corporate. We have the same type of numbers also among our customer segments. Corporate unit-linked, it's growing but it's more stable, but it's also very sticky. As I mentioned, 6% annual growth since 2020. And we see that we can still grow -- this is the growth business. But if you describe growth business with that, it has to grow like double-digit numbers, then it's not. But it's growing. And once you have that high market share numbers, there's a lot of work to do to keep the market share as well. But this is really important that it keeps pace our growth in other areas in wealth management and institutional side. So how we do our business in Finland? So we have 10 locations all over the Finland, only the big cities. We are not -- we don't have offices in very small towns or rural areas. We have 50 corporate sales personnel sitting in the same premises with our wealth managers. So once we have office, for example, in mid-Finland, like Tampere, that's under the same manager. There is both wealth managers and corporate salespeople. So they are doing job together in order to get, let's say, not just the corporate money, not just the corporate products, everything which we can get out of the customers, so meaning the wealth management as well. So -- and we have done this with the increasing speed, but there's a lot of room to improve still. But already now, we see that this unique concept we have compared to any other player in the Finnish market really is that 70% of our new wealth management sales is involving corporate sales personnel. So they work, how they feed the wealth manager is proving it's -- that it's working. 83% of wealth management assets under management is some kind of connection to corporate segment. This is the one example I will not go to details. There's a lot of details in this slide, but it just shows that there are many ways to get bigger size of the wallet than we used to have more than 20 years ago or more than 15 years ago. So we did that. We sold out pension policies, risk life and so on in the past, but that was it. We didn't touch the issue how about your investments as a corporate, how is your wealth management as an individual, as a wealthy person owning the company, selling the company in such a way some U.S.-based company and so on, selling your company to private equity. Now it's all here, we are combining our relationship in corporate segment and feeding our wealth management growth at the same time. And this is behind our success. If you -- if we look at our first 6 months number this year, we saw net flow around EUR 450 million. One of the reason was really good cooperation between the corporate segment and our wealth management. Especially in ultra-high net worth area, we were really getting a lot of good results from our cooperation between 2 divisions. So what I've just told it's just how the numbers looks then. Since 2008, from EUR 6.1 billion altogether, but remind you that was EUR 4.5 billion with-profit on that time, only EUR 1.6 billion unit-linked liability on that time. Now we have EUR 10.8 billion, annual growth, 14%. At the same time, with-profit down 4% per year, from EUR 4.5 billion to EUR 2.4 billion. So we have done quite a good job, I think. And now it's time to speed it up going forward. And there's a lot of initiatives we can -- we think we can enhance this growth path. Customer assets under management development. This is a little bit like shorter period of time since 2020. If we think about 2020, it was the year of COVID like 2021. Then 2022 started the Ukrainian war. We haven't got that much help from the market even though our investment products and performance has been good. But still, only EUR 0.5 billion market movements helping us. Luckily, not negative. But what has been good in those, I would say, difficult times, we have managed to get EUR 1.4 billion net inflows. So I think it shows that we can sell even in rainy days. So even in a difficult market, we have managed to get new money in. And at the same time, our customers have been happy with our products, our performance. So we have also managed to keep the money, which is as important as selling as well. So our net flow has been really good last 3 years. And it's not just the assets under management, which is, of course, in this business, very important to have a lot of assets under management. This is a very scalable business. But of course, important thing is are you getting fees off that? And what kind of fees you are getting? We are very disciplined in our margins. Even though we have been growing very fast since 2020, for example, we have managed to keep our margins at the same level. So we are in asset classes, which Lauri will tell more about and describe our business model. We are in asset classes, which are naturally a little bit higher fees based like ETFs and index type of investments. But we are very disciplined and we are going to be very disciplined in our pricing and margin. So we will not try to get more assets under management just with the price, marketing and so on. Our growth when it comes to fee income is 21% on institutional and wealth management. That's our growth engine. At the same time, our corporate is growing as well. What has been more stable is our retail, which is mainly our cooperation with Danske Bank, and 1% growth is not big growth. And we see and we hope that there might be some improvements going forward with Danske Bank, hopefully. But it's -- I think it's fair to say that our view is that the main growth in the future will come from our institutional and wealth management side, as it has been lately. A few words about cost/income ratio. Jukka will tell more about our investments, our platform and how we see that going forward. I think if we look at the last 3 years, we have had a lot of change in this company, new people, growth on manning side and a lot of investments to our IT, our portfolio management and so on. So I see that it's -- now we have a platform which can increase, so we can get -- take more assets under management in and so more money in and with that way also, improve our cost/income ratio in the future. So to wrap up this all before I let Lauri to go more deeply to the institutional and wealth management side, our growth engine. Finland is a very attractive market. We have seen very good growth in the past. And our view is that the growth will continue. We don't see any signs of this growth being more modest in the future. At the same time, Mandatum, especially now as a stand-alone company, listed entity, will be very well positioned in this growing market. We have a very good reputation. I just mentioned one of you that Mandatum's brand value is the 25th highest in Finland by a recent survey. So brand value is very high. We have very high NPS among our customers, very high market shares in many, many areas, especially in corporate segment. Institutional and wealth management, on the leveraging leading market position and how we will do that, we are already big in institutional -- as an institutional wealth manager in Finland. We are #1 when we think about our expected change in client relations in the next 12 months. So I think it's -- the right way to put it is that we will enhance our business in our institutional wealth management and still enhance that. But where we can still grow a lot is our private wealth management, both in high net worth -- among high-net worth individuals and ultra-high net worth individuals, family offices and so on. That's the area we are still quite small compared to especially the big banks and some midsized wealth managers in Finland. So that's really the area we can still grow. And we have a, I think, quite unique system to feed our growth on wealth management side, having in mind that we have a huge connections to those who have money through our corporate business. Corporate side, it's important part of our business as a feeder to wealth management growth, but it's still -- there's a lot of growth areas on that side as well. We can improve its cost/income ratio. We can enhance its business by doing data analytics. And at the same time, there's a certain growth areas like remuneration, personnel funds and so on. So it's not just a feeder base. It's a growing business as well, but not in the same scale than our wealth management side. And then -- sorry, back. A few words about Sweden and Denmark. What we really like to do is that we will repeat our success story, what we have seen among institutions in Finland in wealth management. We were like 5 years ago really non-existing institutional wealth manager in Finland. I guess, the first survey was like we were on the position like 13 or 14. Now we are among the top 3. We know it's more difficult outside of Finland. We don't have corporates to -- have corporate side to help us. But with, let's say, more like doing pipe laying and flying to Denmark and flying to Sweden, we have operations in Sweden, 2 people. And now we are putting a lot of resources, we will have 3 people in Sweden office. We still have managed to already gather EUR 1.5 billion assets under management from Denmark and Sweden. Lauri will tell more about this. So that is something we are putting more resources and efforts in the coming years. And we are, just to remind you, we are only doing institutional wealth management outside of Finland. So no private persons. It's only institutions, family offices and so on, so professional buyers. And then the last, maybe not least, is that as I told you, the Finnish life instrument market is really consolidated already. So 4 players are dominating the 90% of the market. But of course, opposite of that wealth management business area, industry is very fragmented. There's a lot of players, midsized, small-sized, big-sized players, newcomers. And having in mind all the legislation changes and so on, I guess, in the future, we will say -- see some consolidation in that market. And of course, we are in position to look at all that happening and maybe the part of that. But at the same time, we will underline that we will not sacrifice our dividend targets and proposal with some M&A issues. So we are really keen on to keep our dividend target as well. So this is something that we only do which really create a lot of value for shareholders. So that was my presentation. And there's a time for questions after Lauri's presentation, then we all will be here to answer to your questions before Jukka's presentation. Thank you.

All right. Good afternoon, everyone here in the room and as well everyone online. I'm Lauri Vaittinen. I'm heading the institutional and wealth management segment. I've been with the company since 2015. And I want to pick 2 lines from previous presentations. First, Pat mentioned on the capital-light side that we have a clear growth path, then Petri mentioned many times that institutional and wealth management is our growth engine. So what I want to do is to give you more detailed description what those lines mean. And I thought I'm going to split my presentation into 3 parts. So first, I'm going to talk on the products and the investment heritage that we have in Mandatum. The second part is going to be the distribution capabilities and also the asset management infrastructure and the platform we have built in the past 2 years. And lastly, let's go through a bit the financials as well. But first, I want to go through what actually, of course, is the most important part is our clients and what our clients think of us and also a bit of the history on that side. So let's start with that. Our clients, they consist of both, as was mentioned, institutional, professional and then nonprofessional clients. Roughly speaking, we have 500 professional clients and 5,000 nonprofessional private individuals as our clients. And if we start looking backwards, actually, the statistics that Petri already mentioned, what is our market share? And what has been the market share development among Finnish institutional clients? And that is the left-hand side graph, shown on the slide. So as was mentioned, back in 2015, our market share was just above 10%. And after that, we have grown very steadily almost every year. And actually, last year, our market share was already over 50%, making us one of the top players in this segment. And when you look this sort of whole timeline, we are by far the fastest-growing asset manager in that segment. And of course, what is important is not just where we stand at the moment but what are the growth opportunities going forward. First of all, when asked from the clients to whom they're going to allocate most business going forward, in that survey, we were #1. That is, of course, important. But also, even though that we are already quite big in Finnish markets, we see that there are still substantial fee income revenue potential even in that segment where we are already very strong. Then if we move into the private wealth, private individual clients, as was said, we are not yet that big, you could say, in any metrics in that segment. Our AUM is roughly speaking EUR 2 billion in Finland, so we operate in that segment only in Finland. You could think of the market being, let's say, EUR 100 billion, so our market share would be 2%, so there's definitely room to grow. And at the same time, when asked from the clients, they are super happy on us and on our performance. So the internal surveys show that the NPS scores are high compared to sort of the industry levels. But at the same time, external surveys like Prospera, in last survey, we were #2. So that means that basically, at the moment, not just the existing clients, but also potential clients are thinking sort of very highly on us. So definitely, that is a sort of good starting point for growth going forward. Then if you think of the -- what has been the success factors, both on the institutional and private wealth side, we have been growing. So if asked from the clients, it's -- you could say 2 things. They like our products and track record, so the performance, and then as well the client service and all things around that. So they are happy on how we treat them. So of course, that as well, I think, those are the two most essential things that you want to be or where you want to be very high quality. Then there are sort of factors also behind the growth that sort of clients -- in some cases, they themselves don't know it, but sort of we know. One thing I know is the cooperation that we have between the portfolio management and the sales resources. And that actually makes us more professional when we approach clients. And then I know that one success factor in the past has also been timing of our products and the offering towards clientele. So for example, back in the days, 2015, we were early movers on bringing alternative -- certain alternative investment to our client segments. So for example, alternative credit products. And actually from that, we can move to the next part. So the products and the investment heritage. So first, I have to say that we are not so-called fund supermarket. We are focused on fairly narrow things. So our core focus areas are on the credit and alternatives. So -- and also on the credit, it's not sort of broad credit, broad fixed income investing. It's the areas that are sort of highly value-creating, so alternative credit investing, loan investing, et cetera, et cetera. And the reason for this is the strong investment heritage we have around these areas. So on the credit side, it's a very sort of -- it's a very straight link to us being an institution investing insurance assets. So starting from '90s, we have started investing into the various alternative asset classes. And especially on credit side, after financial crisis, we started doing our own investing into this wide high value-add credit type of product areas. And the same goes to the alternatives. That's not only linked to the insurance group's balance sheet investing, but there's also a link that our portfolio managers have been involved in the very successful Sampo Group's M&A activity and also buying, developing and selling the entities within Sampo Group. So basically, the alternatives, private equity expertise and heritage comes from that side. And then even though that we are fairly focused, these sort of products that we offer, the number of the products is fairly small. Still, we have wide enough product offering for us to be able to be resilient in different type of market cycles. We can shift from one area to another, which I'm going to talk later on what has happened in the past few years. So we are not dependent just purely on one asset class. And of course, all these expertise managing large mandates, et cetera, are utilized in broader mandates on a private health offering, et cetera. And one thing I have to still mention on this section is that as we are focused, that means that we can excel on the sustainable investing side as well. We are in the forefront in all the products that we do, we are in the forefront on the sustainable investing as well. And we have invested a lot on that side. Now with moving to the, as I mentioned, distribution, asset management capabilities, infrastructure. So let's start with the asset management infrastructure. So we have invested a lot on the product offering, widening the product offering, all the entities that we need to distribute the products we have, for example, UCITS fund management company, Luxembourg; AIF fund management company in Finland; all the reporting, all ESG teams, et cetera. So we have invested lot of OpEx in the past few years for building these capabilities to deliver the products to our clients. A large part of this is, of course, recurring, but it's not sort of increasing all the time. So most of those investments have already been made. And on top of that, as we've been doing those investments, a lot of those investments have been also one-off. So of course, when we build a new product or build a new, let's say, hub to Luxembourg, those are one-off costs, at least some part of that. So that sort of is a positive thing going forward, and the things that Petri mentioned, for example, on cost/income ratio side going forward. Then is the distribution capabilities. In Finland, we have extensive distribution capabilities. It's not only the direct distribution we have on the institutional side, for example, but it's also in the private wealth. As Petri mentioned, we are getting a lot of synergies of having shared resources on the corporate side. So we have the 10 locations. We're having shared resources, shared offices, et cetera. So we are ahead of the competitors who do not have this link. And on the institutional side, we have been able, with the organic growth, organic investments, to grow the business, as you saw in the beginning of my section. And now, on top of this, we are growing in Sweden also sort of on the distribution capability side. Now we have, as was mentioned, 3 people in the Stockholm office, and we think that we can basically repeat the same growth path as we had in Finland outside Finland as well going forward. So what does this mean when we say that we want to repeat the same growth story that we had in Finland? Well, you got the part of the picture in the graph where we had the market share development in Finland in the past 10 years or so, and that can be seen here as well. Finnish business have been growing with 15% cumulative average growth rates in the past year since 2017. We are already seeing similar growth rates in Sweden, Denmark. Of course, the percentages are higher, but even in absolute terms, EUR 1.5 billion is not a nonmeaningful amount, in our case, asset raised outside Finland. And the -- but the sort of details around it is that actually we are doing exactly the same or following the exactly the same process that we followed -- did in Finland. So we started in Finland with very few products focusing on these sort of really core expertise areas. And again, it goes back to the high value-add credit type of product. We started that in Finland. We have started that in Sweden, for example. And we are seeing high growth in that area. Now of course, going forward -- it's sort of we are happy for the growth at the moment, but going forward, sort of widening the sort of product offering outside Finland is in the plans, but now we are focusing on the credit side. And if you think of, on top of this, the sort of addressable market, even though that the competition, we know competition in Finland, Denmark, totally different level than here, but at the same time, both of these markets are way bigger than Finnish market and especially combined manyfold. So the potential, we don't -- is big and we don't need to get as high market shares outside Finland for these businesses to be substantial in our sort of scale. And as said, the EUR 1.5 billion already, that is a substantial AUM for us. Okay. Then jumping into financials within this segment. So let's start with the AUM growth. Petri already had the Mandatum-level growth figures, but in this segment. As was mentioned, '21, I want to focus on the last few years because sort of I think this has been a super interesting period in the markets. And it's -- these are relevant years for that reason. So '21 was a very positive year for markets. As you can see, the EUR 0.8 billion was market movement in our portfolio. So very positive year for market for our products. And fundraising, you could say, was, for that reason fairly easy for industry overall. So we raised, in that market environment, EUR 0.4 billion. And actually, at this point, I have to say that most of our products are -- when compared to the peers, they are fairly defensive. So the '21 wasn't sort of, for that reason, maybe the best years for us. But then '22, which was -- it was a really difficult year for markets, yields spiked, Ukraine war, et cetera, on top of that. So the fundraising environment was difficult. But for us, it was better than '21. So it shows the resilience of our fundraising and business overall. And then now this year, it's been definitely easier, or at least the market volatility has been lower than in previous years. In the first 6 months, we have raised already EUR 0.4 billion. And annualized, of course, that is a way higher figure than in previous years. And what is then the reason behind this resilience during this volatile period? One biggest factor is that we have been able to convert the fundraising from our alternative products into credit products. So for example, in the first half of this year, most of the fundraising actually came from credit products. And at the same time, as we have the alternative products in the background, most of those are vintage products where you don't have outflows at the same time. Then if jumping to what does this mean on fee generation revenue side is, of course, if you raise AUM and you're able to keep your margins steady, that means the fee income will grow. So the AUM growth, in the last slide, in 2.5 years, was roughly 50%. Our fee income growth from 2020, which was EUR 28 million, up until now actually has been 64% if you annualize the first 6 months, so 64%. And as can be seen, the fee margins have been really steady even though that our product mix or asset mix has shifted from alternatives to credit. And one example of that we have been able to maintain the margin is our flagship product, which this year has raised EUR 150 million. It's a loan product. If you calculate the margin from the new sales, it's been 1%. So definitely, sort of we've been able to keep the margins on the new sales as well. And as can be seen, when looking back, the alternatives, the growth rates have been extremely high, and actually on the credit, fairly low, but now we are seeing the mix, as I've been saying many times, shifting from alternatives to credit. So to summarize my section is that if you look backwards, you can clearly see the good growth rate numbers and what we have achieved. But of course, the more important is going forward, I think our product mix and the capabilities on sort of platform side are really good for the growth going forward. And then that combined with the fact that large part of the organic sort of investments have already been done in the past. Of course, when growing, that increases your cost base. But at least if you think of the cost/income side, we think that sort of there's a good possibility to improve the cost/income ratio for those reasons as we have been doing a lot of investments in the past or even in the past 10 years. All right. I think that was on my part, and now we have the Q&A with Sami and also other speakers in the first section.

[Operator Instructions] We're going to start with questions from the room. So if you could raise your hand if you have one, and then we're going to try and make sure that we have time for online questions as well. Okay. If we start with Jan Erik here.

Jan Erik Gjerland from ABG. I just have a couple of questions, but I'll stick with one, as was said. If we could start with the competition in the unit-linked business. You had a fantastic 48% share. So how is it possible to get there? And how could you sort of stick there without any competition, it seems to be? So is it possible to maintain like that or even grow it? And secondly, then on the same kind of market share side, on the risk life, how we sort of that linked towards the unit-linked product as such? Or is it sold on its own, if you can answer that as well.

Yes. That's a question for me. Thank you very much. Very good questions. So I think if you're holding almost 50% markets in unit-linked group pensions, it's quite difficult to grow it anymore. I think it's a tricky thing to keep it at that way. But the reasoning why we have so high markets, there are many reasons for that. I guess the one reason is that we have, by far, largest offering to our customers. We are not just selling to our customers a product. So it's not just selling the group pension plan. It's selling the remuneration, variable compensation system. We have consultants to do that. So midsized not listed company doesn't many times have any variable compensation system, so we build up that first, then we sell the unit-linked group pension plan afterwards. So that's something that others are not doing. They just try to sell the product. We are selling the service. And we have 50 people just doing that. And of course, not just doing that, it's selling the remuneration, personal funds, unit-linked policies, risk life, which I will come back, and the whole package. And no other companies, they don't have that kind of sales forces. Why we have and why we can afford to that is that they are selling so many things and also feeding the Institutional & Wealth Management with the hints to wealth management. So that kind of sales force, it doesn't exist in any other company. So that's the one reason. So if you want to build up the system, the pension system in Finland, we are the one they first refer and call, really. We have expertise for that. And the second one, the risk life. You are right. It's a stand-alone product in a certain way. There's no link to unit-linked, but it's a huge link to the whole offering. So it's not -- we don't want to left that door open to someone to come between us and customers, so we have to do that. And it's a stand-alone. It's a profitable product. But let's see if someone is driving around in Finland just selling that product, it might not be profitable. But if you are selling that with -- among others, it's good add on that. So we want to take care of the whole relationship. That's the thing.

Sauli?

Sauli Vilen from Inderes. I guess this is for Lauri. About your product offering, your in-asset management side. You're still operating with fairly narrow focus, you could say, range. Are you happy with the current offering range? And how would you like to see that being developed over the years?

Very good question. At the moment, we are very happy on the product offering for current market circumstances. But of course, as we have been in the past, we are flexible on introducing new product areas, even new teams, et cetera, going forward, if the market situation changes. I think the platform we have, one good example, that we are ranked #1 among finance students in Finnish universities. So we have very good platform to build capabilities in other areas as well. But of course, we want to stick the areas we know best, and sort of the areas we would expand are probably first going to be close to the areas we know best and expanding within those areas.

And then still to you. About the only fee-based income, how big of a share are the onetime fees there, for example, maybe like carry income or et cetera?

Yes. I'm not sure was it in the footnote, but the figures I showed didn't include performance fees or carry or any onetime-related fees.

Then finally, about the Danske Corporation. Petri, I think you mentioned that you hope that it will get better. Is there a some concrete steps what you can actually take to make it run better?

Yes. Thank you very much. Very good question. It's -- after having very long journey with Danske, we have tried many things. But it's -- I think we have -- with -- it's also the new management in Danske at this point. And so the cooperation and the level we are now discussing how we will support together our businesses is in a really good level now. So I'm -- in that way, I'm more optimistic than some other times behind us. There have been many different area -- times. But at this point, the existing management is really willing to support our common business, so that makes me feel more confident that we can really enhance the business together with them.

I'm [indiscernible] from OP Group. I have one like a sort of a high-level question. You have 2 very different kind of stories here. Of course, the capital-light business, without a doubt, there is a good growth opportunities, but then you have very profitable, good profit business in rundown. So putting all, all together, do you believe that your earnings will be higher in 5 years than they are today without any acquisitions or so?

Yes. So I can answer to that. Thank you very much. Yes, we -- of course, we understand if you look at one thing going down and producing a lot of profit at this point and one thing is growing, but it's a fee-based business, you need a lot of assets under management, after 5 years, it's really difficult to forecast. But in budgeting, we -- of course, we try to be in a position that our absolute result is bigger than today. Even though we know that it's a part of our business is going down, and it can create that much profit anymore in the future.

So maybe I'll just comment then on the acquisition side. We haven't calculated [ with an ] acquisition, so that has to be value creative and opportunistic. And as you know, we have many opportunities into asset management. We have seen everything in Sampo during my career in over 20 years, and I know how difficult it is to find a good asset manager at the right price. So we will be very defensive on that side.

[Operator Instructions] Just to follow up on, because we've had a bunch of questions on inorganic growth, for example, from [ Tufano Spiro ] from Berenberg. What's your appetite in terms of expanding through inorganic growth or M&A abroad outside of Finland?

For the moment, absolutely no appetite. Of course, we have to -- we are just starting our journey here in Finland. And if we are going to look, it probably will be in Finland. But as I said, we have to be really picky because when you look historically on asset management deals, it's not easy as the goodwill can walk out of the door every morning. So you have to be really certain to do anything. And it has to be first Finland. Hard to imagine that we would look outside of Finland.

All right. Let's go to Jaakko.

Jaakko Tyrvainen from SEB. I could continue on the M&A side of things. What factors or futures you are looking at or eyeing when you're analyzing or considering potential M&A candidates?

It's really easy, as I said. It has to increase the shareholder value. And that's the way we have always done it in Sampo also. We are not entire builders. And it has to be a building block to our existing business, that we are really sure that we are creating value. It's as simple as that. We are not taking 10 candidates, and we want to buy something. It has to fall naturally, a piece, to us.

If I may add, it's very important. It's cultural fit is very important in our businesses. So it should be very cultural fit if we do something. And of course, you can buy distribution, you can buy teams and so on. So different factors, of course, it's -- we are very picky with that.

And then on your product offering going forward and your efforts in new sales. Alternative is obviously -- saw a very strong demand in the era of 0 interest rates. How has the appetite for alternative products developed now that the rates are on a high level?

High level on the like market level is for sure that the appetite is decreasing and even heavily in some areas, and you can see it on public figures, on private equity -- et cetera. But as I said, we have been focusing, first of all, high cash flow generative strategies. That is a positive thing in this type of environment. And also, in some sense, more defensive, not leverage-driven strategies that much. So that is, again, in this interest rate environment and maybe economic environment, positive thing.

Hans?

Hans Rettedal, Danske Bank. I was just wondering, in your -- you mentioned institutions and wealth management, the growth has -- or it's been a growth driver. And then you also say 70% of your corporate customers are customers in this. How much of the growth has come from sort of the cross-selling of those? And if you're at 70% already, how much can you sort of continue to cross-sell between those 2 segments?

Yes. I think the very clear answer to that, because on the institutional side, it's not that much cross-selling. The cross-selling is on private side. And there, the market share is really low. So I think there's a tremendous opportunities and growth prospects on that side going forward. Someone has those 98% of the market, and a large part of that wealth has some kind of corporate connections. So that's definitely a sort of cross-selling opportunities going forward as well.

And then I was just wondering on your fee income, you've managed to sort of hold it up quite well. And you mentioned that you've been -- your new sales have been mainly in the credit. And from a risk perspective, then, can you just explain the product mix in credit if you managed to keep the fee income unchanged after sort of having grown very strongly in alternatives over many years?

Yes. For us, you could say that the lowest margin products are on the credit hire bond type of strategies. Then the medium margin products are on the loans, leverage loan strategies that we manage in-house. So it's a sort of high value added that we do in-house, and the margins are higher than on hire bond strategies. And then we have the alternative strategies where we have also opportunistic parts which are sort of -- should be good in volatile periods in market even though that the overall market demand goes down in alternatives. So all these basically areas, we see that the margins are high, maybe not on the hire bond side, they are sort of not super high, but still combined, as said, they are on that level that it's not difficult to maintain the existing margins that we have.

All right. I think we're running out for this -- of time for this first Q&A session. There will be another one later on where we will get back to some of the questions we missed, particularly the online ones. But let's reconvene again 20 minutes past 4 and restart the presentations then. [Break]

All right. Our next presenter is the CFO of Mandatum, Jukka Kurki. Please go ahead, Jukka.

Thank you, Sami. Okay. So next, we continue with, with-profit portfolio. This portfolio is in runoff stages and -- but still having an important role when it comes to our profit generation and also capital returns. Today, our main focus, when it comes to this segment, is in capital management, asset liability management and also seeking spread from assets over cost of liabilities within risk limits. My name is Jukka Kurki, I'm CFO, being in that position since 2009. And before that, I was Chief Actuary. So first, short overview. A majority of these policies were sold in 1980s and 1990s, and we started to focus on uniting segment in 2001. And since that, this portfolio has been more or less in front of sales. AUM is EUR 4.3 billion, including also sale of equity, and liabilities, EUR 2.4 billion, and majority of that liabilities come from the pension policies, meaning that those kind of be surrendered or transferred [indiscernible], sticky and also well predictable -- well predictable liabilities, and so we have a very good view on the expected liability profile. We have 2 separate portfolios, both having different liability features, different profit-sharing rules, different risk appetite and also different investment policy. And when it comes to Finnish profit-sharing rule, that is quite different compared to many other countries. Here, we have more flexibility in that. But on the other hand, when it comes to flexibility change in any other policy terms and conditions, there, we don't have, to be honest, more or less any flexibility to change those policy terms and conditions. First 6 months annualized investment return was around 6%, and that exceeds clearly cost of liabilities. So investment result during the first 6 months was EUR 57 million. And when it comes to current fixed income mark-to-market yield, that is 5.9%. And today, we are discounting our liabilities at market-consistent curve, and that curve is roughly 3.5%. So 5.9% mark-to-market yield and 3.5% discount rate, roughly. Around 10 years ago, we estimated that our liabilities will decrease by EUR 2 billion in 10 years' period. Those decreased by EUR 2.1 billion in 8 years' period, and reason for that faster decrease is that we have made tens of different management actions to speed up that trend. We expect that trend to continue and liabilities to decrease by around 50% until end of Solvency II transitional period. Today, liabilities are discounted with market-consistent yield curve, meaning that there will be annual volatility within those. But anyway, trend is very clear. We are long-term investor with long-term investment strategy that is very natural if you think about our liabilities, which are also long term and steady. Our long-term average investment return has been 5.6%, which has exceeded also clearly our cost of liabilities during those years. Today, our assets are much less risky and also less volatile, but still return expectation is in the same level or even higher as interest rate has increased. And when interest rates started to increase last year, that gave us an excellent opportunity to start derisking and without losing asset return expectation. And also as an independent company, our risk appetite is different than it used to be. And so due to these 2 things, our current target allocation is also quite different and less risky than it used to be. And when it comes to this derisking, main change can be seen in listed equity allocation that used to be around 30% a couple of years ago. At the end of last year, it was 20%, and today, it is below 10%. But this derisking is also ongoing inside fixed income assets. High-yield exposure has decreased as new investments are made only to the investment-grade assets. And we also set up a liability hedging plan, and today, roughly 55% of the liability risk is covered with fixed income assets and swaps. This derisking has, of course, had material impact on our capital requirement. First of all, [indiscernible] is that this big profit market risk capital requirement, that is by far the biggest element in our capital requirement. 18 months ago, that capital requirement was EUR 1.2 billion, and now it has decreased close to 50%. Main change can be seen in equity side, which has decreased by around 60%. And today, [indiscernible] of our equity risk comes from the private equity assets and private credit assets. Spread risk has also decreased as hire exposure has decreased. And interest rate risk has decreased by 40%, and that is due to swaps we have made. This all has also a material impact on the own fund sensitivities on the right-hand side as you can see. We will continue this derisking, but more like with baby steps compared to last 18 months actions we have made. Okay. That was about the with-profit segment and with-profit business. Next, we continue with the financial performance. And first, we will take a look on the key profit drivers, key result drivers, focusing on the fee result and then deep diving into organic capital generation. And finally, [indiscernible] related to solvency position and also capitalization. Our earnings logic is actually quite simple. We have 3 different result components. First one is fee result that is related to client assets. Main component or main product drivers being AUM, fee margin and cost/income ratio. That is already a very important part of our result. That is, in a way, also the most valuable part of our result. And that is also a focus area where we are seeking growth in the future. Second part or second element of the result is investment result that is related to with-profit assets and liabilities, and that result is simply fair value asset return minus cost of liabilities. And today, cost of liabilities, because we are now discounting liabilities with market-consistent yield curve, this cost of liabilities is much more transparent and intuitive as it used to be. And we will also, of course, disclose you lots of information quarterly on related assets and liabilities and also liability sensitivity. So you will get good view on the components behind that one. And when it comes to expectations related to investment results, those long-term expectations are in line with the expected liability movements. Third one is risk result that is very modest when it comes to our 6 months result and okay, this [ are also ] that we are not expecting any growth in that area. That's true that we are not -- as such, when it comes to the business, we are not expecting any material growth, but we are definitely not happy with that kind of result. So this line doesn't mean that, okay, result expectation is something like that. Okay, risk result that is related to our risk policies, meaning debt covers, disability covers and critical illness and so on. Main component in that is CSM and CSM release. At the end of June, that CSM was EUR 130 million, and we expect around 10% of that to be annually released through profit and loss. Then let's take deeper look on the fee result. AUM is the basis for fee result, and net flow is the main component behind AUM growth. Investment market, as Lauri already mentioned, investment market has been quite volatile between those years, but we have still had good net flow for all those years. And this first 6 months' net flow, that has been outstanding, mostly thanks to the Institutional & Wealth Management segment. We have disclosed 5% net flow target, and as can be seen, Corporate segment is well in line with that target, and also good to remember that this Corporate money is totally pension money, meaning that, that is sticky and long-term money also. Retail segment, that is mostly [ Danske Corporation ]. That has been slightly negative. As Petri mentioned, we have positive expectation on that too, but it doesn't change the big picture that our net flow target and growth target, those relies on the Institutional & Wealth Management segment. Another key driver when it comes to fee result is fee margin. Petri already told that fee margin has been stable 1.2% during recent years, and so also fee income has developed in line with the AUM. And as already shown in previous presentations, that the fee margin growth also comes mainly from the group Institutional & Wealth Management segment. We strive for discipline in pricing and margin, but of course, total fee income may change as the business mix is also changing. Then this may look a bit technical, but let me explain this one. Inside this 1.2% total fee income, we have 2 different kind of fees, which are treated differently in profit and loss. First one is so-called pension fee that we get from the unit-linked pension policies, and this fee and related expenses are already recognized in CSM or shared equity. The CSM, contractual service margin, tariff present value of expected future results based on our best estimate cash flows. At the end of June, that CSM related to these policies, that was EUR 270 million, and we expect 9% of that to be annually released through profit and loss. Then this -- another component that is related to investment and asset management services, now this notice that we get this fee from all client assets, also those assets which are backing unit-linked pension policies. That fee margin is 70 basis points, and approximation for that result component is AUM, EUR 11.2 billion times 70 basis points fee margin times 1 minus 75% cost/income ratio. I will come back to this cost/income ratio and expenses actually in next slide. So expenses have increased during recent years, but that has been our conscious decision. We have been focusing on growth and also -- and due to that, we have invested, as Lauri mentioned, we have invested very much into this capital-light area then building platform. So today, we see that majority of our critical investments are made. So -- and still our main focus is seeking growth, but we are in a position that we also start to pay the [indiscernible] to our cost control and so on. So when it comes to cost/income ratios, which are on the right-hand side, 66%, 67%. That is total cost/income ratio related to this client assets. We see that because majority of investments are made, we are now expecting to see also some kind of scalability benefits, and so we are also targeting to decreasing cost/income ratio. And notice that this 67% cost/income ratio, that is related to total client assets, fees and expenses, including also those pension fees and expenses. And so when it comes to previous page, fee result related to investment and asset management services, then we should use the 75% cost/income ratio, which is also presented here. And as a summary, for this capital-light section. We have set 3 different targets, which are very crucial for this capital-light area. And all these are targeting growth, both AUM growth and also both fee result growth. And all client segments are totally focusing on capital-light area and also committed into these targets. Majority of AUM growth, that is expected from the Institutional & Wealth Management segment, and that, first 6 months, that was excellent, excellent. And as mentioned already, we also strive for disciplined fee margin, meaning that we are not sacrificing our profitability when seeking growth. And we also believe to see scalability benefits and also targeting also decreasing cost/income ratios. So that was about profit drivers. And next, we move to capital generation. Our solvency position and solvency ratio was already very strong at the end of last year. Solvency ratio, 266%. That has improved further during this year, and now it's close to 300%. And main drivers behind that is the management actions as can be seen here. First one is that we have paid -- or actually, they have not yet paid, but we will pay in September EUR 100 million [indiscernible] loan back to Sampo, and that is already deducted from our own funds at the end of June. We got approval from Finnish FSA earlier this week, so this will be paid in September. But the main impact [ inside ] management actions is the EUR 135 million decrease in capital requirements, and that is due to derisking. So all in all, this board has a very positive impact on our capital solvency position. And then we have this other line, there we have 2 one-off items which explains that, and that decreased our solvency ratio by 25 basis points. So we end up to -- close to 300%. And we have also presented here pro forma solvency figures, and that pro forma means after those acquisition that we are planning, acquiring Saxo Enento, and those small investments, smaller investments from Sampo, those will increase our market risk totally by around close to EUR 200 million, and that increased our capital requirement. And also as part of the separation part of Sampo loan will be transferred to 1 item, and that will decrease our own funds by EUR 84 million -- EUR 85 million to EUR 90 million. These are not exact figures that those exact figures will be finalized quite soon. So all in all, that has -- that decrease of -- not decrease, but pro forma solvency ratio after these adjustments is 232% still very strong. But pro forma solvency ratio and others are not the main topic or main point in this slide, main point is the organic capital generation. So own funds generation, EUR 51 million and SCR reduction of EUR 44 million, so let's come back to those. So first of all, organic capital generation during this year, EUR 140 million and close to EUR 400 million during last 18 months. So even in a year like '22, we were able to deliver material organic capital generation. And this all has also more than covered our dividends that we have paid. And when it comes to the EUR 140 million, EUR 51 million of that comes from the own funds' generation, meaning that how much we have been able to generate new own funds from -- to our business. Around EUR 40 million that comes from the investment result and EUR 10 million from the new business. New business has created around EUR 10 million new own funds. And then capital requirement has decreased by EUR 44 million due to business evolution. And by this business evolution, we mean that with-profit liabilities are decreasing and that decreased capital reduction. But also when it comes to capital light area, new business requires less capital than the old book. So that is also releasing capital. So all in all, capital SCR reduction was EUR 44 million during first 6-month period. And if assuming 200% solvency ratio, that releases capital totaled EUR 88 million. So we end up to EUR 140 million. EUR 28 million of that comes from the capital-light area and rest from the with-profit area. I will go through more closely this with-profit area on our organic capital generation next slide. But before that, a few key takeaways from this slide. First one is that, so far, organic capital generation has more than covered our dividends. Next one is that capital will be released due to business evolution. And third one is that fixed income assets mark-to-market yield exceed liability discount rate, so we have also a positive expectation when it comes to own funds generation. Then -- but to the organic capital generation, and I'm now focusing on with-profit side, EUR 40 million own fund generation that comes more or less totally from the investment result -- by the way, notice that these figures -- after that figures. And SCR reduction due to business evolution, EUR 35 million. And again, is assuming 200% solvency ratio, that releases capital by EUR 70 million. So we end up to EUR 112 million organic capital generation during that period. Also good to notice that our current solvency ratio is much higher than 200%. So in real world, more capital has released on that one. But we have used is 200%, which is our upper level of our target zone. And another thing which is good to note is if forecasting this SCR reduction during first 6 months, EUR 35 million, today our capital requirement related to the with-profit portfolio is around 30%, more or smaller than it used to be. So also going forward, this SCR reduction related to business evolution will be a bit lower over than that one. Then a few slides related to solvency. Our solvency position has been very resilient for different market movements. There has been COVID, there has been Ukraine war, there has been negative market rates, there has been negative market -- positive market whatever, our solvency ratio has been stable or even improving. And if you look at the own funds, maybe a better half here, but own funds at the end of 2015 and compared to own funds, today that has increased by EUR 450 million. Okay, we issued subordinated loan in 2019, EUR 250 million. So if we deduct that, then own funds have increased during that period, EUR 200 million. But in addition to that, we have paid EUR 1.5 billion capital flow to Sampo when taking into account all dividends, group contribution and also that EUR 100 million our Tier 1 loan that is already deducted from the old funds. So -- and also good to note is that our own funds quality is excellent, majority in Tier 1 -- Tier 1 capital. And during last 2 years, solvency ratio has improved significantly, and that is due to the -- due to derisking, which has decreased our capital requirement. So key takeaways from this slide, very strong and resilient solvency position, and also EUR 1.7 billion capital flow and own fund generation since 2015. And a few words about capital management. As mentioned -- just mentioned in previous slide, very strong solvency position and also resilient and also trend is on our side as liabilities are decreasing and releasing capital. And we expect growth from fee result and also current mark-to-market yield gives good basis for investment result too. So this together with business evolution supports our EUR 500 million cumulative dividend target. Since 2020, we have paid EUR 500 million dividends to Sampo and around EUR 50 million group contribution. Solvency ratio targets on 170% to 200%. Today, pro forma solvency ratio 232%. We are not in a hurry, putting that inside our targets are. And then finally, our financial targets. In a way, all we have presented here today are summarized into these targets. These targets on the left are crucial for the capital-light area. And all client segments are totally focusing on that area and also focusing on these targets. With profit portfolios in one-off status, and so liabilities will decrease and that will also release capital in the longer term. Solvency ratio targets already mentioned, and then we have last but not definitely least, our cumulative dividend target, EUR 500 million for next 3 years period. I see that we have all pieces in a very good order to achieve the target. First one, fee result is in a good part and also capital will be released due to business evolution; and third one, fixed income assets investment result -- investment -- fixed income mark-to-market yield is exceeding clearly discount rate of liabilities. So -- all in all, we are very, very confident with this cumulative dividend target we have set. That was all from my side. So -- but the closing remarks we will give [indiscernible].

Yes. All right. I hope that we have presented today that you find that Mandatum is an interesting investment opportunity, and I will want to be very brief, so just repeating the 3 takeaways that we had tried to present today. A proven foundation, we know what we are doing. We have a proven track record. We have a clear growth path. And as [ Jukka ] presented many times that we know that we have a strong balance sheet, and we will return capital to our shareholders. So thank you all for participating on my behalf on the first Mandatum investor event, and then we move over to the Q&A part. Sami, please, you can moderate.

All right. Let's go to the second Q&A session. Then once again, please try and ask one question at a time. I'm going to start with a question actually from online this time. We've got a question from an investor about capital returns, where they point out that you have quite significant about EUR 2 billion of own funds that you're going to carry over some private equity assets into the new structure, about EUR 400 million. So do you see opportunity to optimize the balance sheet over time? And do you think that it's possible to -- or is there potential upside to this EUR 500 million dividend target that you've given?

As we mentioned in our presentation, so definitely, we want to be conservative in the beginning. This is the beginning of our journey as a listed company. But of course, we will optimize going forward, and we have a clear midterm target that we will go between EUR 170 million to EUR 200 million. But of course, we want to execute faster, but not to overpromise anything.

When it comes to optimizing our assets, I see that because liabilities are sticky and long-term, I see that those alternative assets actually fit quite well to our liabilities.

Okay. Great. Let's take a couple of questions from the room then who wants to go first. Jan Erik?

Yes. Jan Erik from ABG, once again. And on the asset mix, you said that you have changed the asset mix quite dramatically from 2021 to 2022 and into first half of this year. How is that driving your sort of normalized return. You had a very good graph 5.6% over the last 20 years or something, which is impressive. So how should we read that into your normalized expectations for returns in that with profit book? Is it above on that level or even below that level?

Okay. If I take that one, as I've been looking after that portfolio for quite a long time. So as Jukka said, our running yield is mark-to-market yield is 5 point now in our -- for now. And when we are investing now, we used to have a really high equity rate, and now we are rolling in that into the investment grade. And if you look where the investment grade is the yields what we are investing in. So we are investing in the same part between 5 and 6 today. So you would expect us, and then we still have the private equity and the private debt on top of that. So the return expectation probably between 6 or 7, but this is just a guess math. We all know, it's not easy to predict future in investment.

Of course, this was just a normalized expectations from your returns. Secondly, you was a little bit interest on the Saxon [ 1 and 2 ]. You said that it could probably fit into your pension business, if I understood it correctly, Saxon Bank or [indiscernible]?

I mean those private equity that we have now backing our with-profit liabilities.

Okay. Exactly. So what's your long-term plan with Saxon and [ 1 and 2 ]?

If I take short background around Saxon and to other investments. They are made by the Sampo investment team that actually came to Mandatum Asset Management 1.5 years ago already. So actually, it's natural that those assets come over to Mandatum side, but we will manage them for value, and we will sell them. And as you probably know, I'm in the Board of Saxon and just have one goal to sell them at as good price as possible and as fast as possible, but market conditions are maybe not the best for now.

Okay. And finally, the income from those assets when they are at your books, would that be purely dividends? Or will it be an associated income to that note?

Majority dividends.

All right. Any other questions in the room? No. Should we take -- there's a couple of left over from the last session. So if you go back to a couple of those maybe. One related to the international expansion and -- yes, maybe it's good if we get you guys up on the stage for this as well. One related to the international expansion on your plans there? And what do you see as your competitive advantage in this area? What is it that's going to win new clients? I guess there's lots of other players trying to buy for this business as well.

Yes, it comes to our sort of core focus and basically competitiveness around those core products. So we have from the investment heritage we have very long experience on alternative credit loan investing, private debt and certain other alternative strategies. So it's definitely around those. But as I mentioned in the growth story, outside Finland, we are now focusing on very limited amount of products. So the focus equals power type of thinking in those.

Good. And then we've had a couple of questions on the cost ratio and cost ratio development. One is you've given an indication of that you want costs to go down, but is it possible to be a little bit more specific about what you see there? And how do you see that developing by segment?

Well, we have not disclosed any more target than this improving cost/income ratio and so -- but as I said, we are targeting improving cost/income ratio, but not giving any exact targets for the moment.

And in terms of investment needs, what do you foresee? You mentioned that you've done a lot of investments already, but do you see a significant need to -- for further investment to support the growth?

Well, Lauri already mentioned that we have done quite much investments, and we see that we don't need any major new investments to meet those net worth targets that we are now targeting.

Okay. Great. Then one question on interest rate sensitivity. Basically saying that at least from Alex Mackenzie from Exane, basically saying that a lot of the EU life insurers have seen a large benefit from higher interest rates over the last couple of years. What is your sensitivity to a downward move in interest rates? And how should we think about this in, I guess, in the context of your solvency target range of 170% to 200%?

Well. That sensitivity, we have actually presented that in our H1 presentation. But if we assume 100% parallel yield shift down, that will cause roughly -- due to our original portfolio, roughly EUR 150 million increasing liabilities. But at the same time, when it comes to fixed income assets and swaps, those will cover around 55% of that decrease.

So half of roughly the 150 would be the 100, 200 basis points.

Yes. Yes.

Yes. 100% solvency.

Yes. Yes.

There has been a couple of questions around the debt in Mandatum as well. And obviously, I can't comment on any specific issuances here, but what do you see in terms of your debt stack and the development of that going forward and your financial leverage ratio?

Well, the pro forma leverage ratio, then taking into account the -- such a deal and vendor note that we are getting. That pro forma leverage ratio is roughly 25%, but we are also planning to pay back that vendor note in at least in 4 years period, hopefully sooner. So also our leverage rates will go down. Even though that I don't see any problems with this 25% leverage ratio, but that in any way, our expectation is that, that will decrease.

And maybe I could comment also on that going forward, of course, we will look at capital optimization with our Tier 1s and Tier 2 also and we will keep alerting all options open going forward. And our rating is single A stand-alone. Perfect. Then if we go back to an operational question, which refers to Slide 12, and this is from Michele Ballatore from KBW, where you showed the market shares that you have relative to competition and that your market share had increased by about 11 percentage points in the last 5 years or so. Could you explain the dynamic behind this and why you -- how you've been able to outperform the competitors so well on market share?

Yes. I think it is -- of course, there's no one explanation for that kind of change. I think the main thing is what I tried to explain here is that we have, especially doing 5 last years, we have manage to increase really the way we operate in a corporate customers and -- and so the feeding to our wealth management business through the corporate connections, that's one thing. Institutional customers -- institutional wealth management customers, as you -- show you the picture of how we have managed to increase our market share on that side. And the third one is outside of Finland. If you look at the figures, when we have grow, it's quite short period of time in Sweden and Denmark. So that's the third one. So all this is coming to our figures here. So it includes -- mostly include that number. And of course, why we have managed to that, it's not just a sales competency. It's also the great performance in our instruments.

Any questions from the room? We take Hans.

Hans Rettedal, Danske Bank. You had a useful slide on the fee margin where you split it up into the pension service fees and the investment and asset management fees. I was just wondering of the 1.2% and then you're splitting it into 0.5% and 0.7%. How have those 2 components developed over the same period, where sort of your total fee margin has stayed unchanged?

We have not calculated it that way because now I'm saying the word, which is -- was not very allowed IFRS 17. So those are related to accounting standard, and that's why we don't have that kind of historical figures.

But do you get any -- under IFRS 17, do you get any benefit on the fee margin from the increase in pension service fees due to CSM?

Yes, that definitely, but that will be going into CSM first and then release over 2 years to capital. As a matter of fact, it -- both elements, there is actually exactly the same profit drivers or growth driver as there is AUM, fee margin and cost/income ratio. It's only about timing when that result is recognized.

We'll take Jaakko.

Jaakko Tyrvainen from SEB. One more on the with-profit business and the runoff there because now that the customers or the policyholders can actually earn higher yields outside their pensions in the with-profit book. Do you see that the runoff that you could actually accelerate the runoff going forward? And would you do so?

Good question. And that is definitely a totally new option for us to be honest. We have been doing tens of different actions to push down those liabilities. But so far, we haven't been able to offer a low-risk investment objects for clients. So -- that is definitely an interesting option for us, and we will definitely take a look at that. And that's right that -- but when it comes to those capital projects and those liability projects that, no we haven't taken any that kind of actions into account.

That's truly if I may add that in the past, we have never used as a reason to convert your existing with-profit policy to something else like unit-link that you might get something, which is bigger than your existing policy benefits and current hit rates. So because -- but now it's a totally different situation, as we all know. So it might be an option.

Great.

Jan Erik.

Just a couple of detailed questions on the with-profit book and probably around the -- how we should think about the guarantee versus your sort of discretionary bonus or whatever you call that about the guarantee levels and when it's actually been taken out? And if the segregated portfolio has -- sorry, the original portfolio, as I say, has 1 book, so to speak. So it means that you have 1 book to share everything into. And then if you have a return above 4.5%, you get sort of whatever is above that. And if you have about 3.5%, you get whatever is above that and 2.5%, et cetera. So how should we read your previous discounting down to 0 for some couple of years versus the future cash flow? Or is everything now discounted back in this IFRS 17 level. So it does not matter anymore about how much you discounted it before. So just running that a little bit more detail, that will be good for me at least.

Yes. That's true that situation has now changed quite much when you have IFRS 17 and -- but only owning it that way that now is more transparent and more intuitive. And so when it comes to those -- sorry, I'm going to detail, where we are projecting those cash flows, we are assuming that interest rates will behave like current forward rate proposals. So if -- and based on that kind of profile, we have also included our best estimate bonuses in those cash flows. And when it comes to this EUR 2.4 billion total liabilities, there is already around EUR 200 million bonuses inside expected future bonuses inside that, okay, majority is related to segregated portfolio. But also when it comes to those original portfolios, zero-guarantee liabilities and 1.5% guaranteed liabilities, there is also bonuses -- expected bonuses are already included to those. So -- that's the answer to your question.

And then you can take out whatever is above that level. Is that what you say? So just returning above that liability sort of cash flow -- you can take that [indiscernible]?

Yes, that's more or less so if interest rates do not change. Yes.

Yes. So if you, let's say, stay at this 4% or something. So it will mean that you can then -- given that cash flow and you're discounting of your liabilities, you can then take out whatever you return above that kind of liability cash flow when it comes to the asset side.

More or so, yes.

Sticking to the with-profit liabilities. There's a question from Johan Strom from Carnegie about what's a good assumption for a sort of rate of decline in the with-profit book. I mean, I guess you gave some longer-term numbers. But is there anything more you can say about the shape of that rate of decline?

I don't -- to be honest, I don't have much more to say about then that profile that we have presented.

Okay. Fair enough. And then on moving back to the business, the operational business again. We have a question about the retail business and your retail touch points are you -- do you have an ambition to add incremental sort of distribution into the Retail segment. Is that something you'd be interested in?

Yes. As we have stated, the Danske corporation is our main path to the retail business area. And even though we have exclusivity to Danske's distribution, and we don't have any hinges to do something else with someone else. If we think about the solutions in Finnish market, we saw, let's say, big enough for us to make really any change. There are not really good names on the table or any other distributions and us to think about. Of course, we are all the time thinking are there any ways to enhance our business in retail. But it's -- this is -- banking is really consolidated. All the banks, they have their own life insurance companies, Danske have, they have us. And so there are no obvious candidates to partner with really.

And sticking to the business and, I guess, corporations. How much of your assets under management relate to Sampo or if and what can you -- what would be reasonable to expect in terms of what might happen with those assets?

In the figures that we have presented today, there is not -- they are not included. So we have presented just client assets of 11.2 [indiscernible] and then we have the with-profit of 4.3, then we have these discretionary mandates, some EUR 4 billion, but the fee income from that, it's minimal and.

That also exclude from the fee figures. And you can see in the presentation footnotes that so got large mandates, which includes those figures.

Perfect. Then a question again from Johan Strom from Carnegie. There's a strong trend for clients to want access to index funds and, I guess, more sort of funds, more commoditized funds at lower margins. Is that something that you would add to your own range of products? Or are you very, very happy to stick with the -- I guess, narrow credit and alternative fund range that you have at the moment?

It's not that we wouldn't be investing at the moment to actually to index products within the discretionary mandates, the areas that we think that we don't have competitive advantage, or we can sort of beat the market, we are using passive products. So when our clients -- especially on the private side, when they're buying broader mandates, they are included. But as such, distributing those products wouldn't make sense to us as it's a sort of lower-margin business and using the sort of channel to distribute those that -- we don't see that happening going forward.

Moving back to the with-profits book, you mentioned before that you're taking some actions to accelerate the runoff there. Does that also add to the growth in unit-linked AUM, can you shift from 1 pool to the other? Basically, this is a question from Freya Kong from Bank of America.

Well, actually, we -- in a way, that's already that question that, yes, that is definitely something that we have been doing and we will continue that, but that is when it comes to those liability profiles and so on, that is not included. This kind of actions are not included into our forecast.

[indiscernible] from [indiscernible]. What is actually included in these large mandates?

[indiscernible], it's mainly Sampo and Sampo daughter companies.

We have said in the materials that one of the clients is [ Elo ] Mutual Pension Insurance Company. And that's included in those figures. But as I said, the margins from that business are very low, and that's one of the reasons that they are not included in the overall figures and the margins.

Okay. I see. And is it sort of a sticky money? Do you have like a long-term contracts? Or how should we expect that money to stay there?

But it's not returning anything to us. It's just a pool of money. So we are not asset gathering in that sense. We are gathering assets. We want fees. So no I can't talk about what Sampo is planning Will [indiscernible] used to work with us. So he will go over to Sampo, and it will be win less job then to decide what he will do.

And I can say one thing on those that -- in the past, it's been a relevant pool of assets when we've been building up the client side of business. But nowadays, actually, the clients are businesses relevant size. So that's not crucial of running the portfolio management and the businesses. And as I said, it's not generating fee revenue. But in the past, it's one of the sort of leverage that we've had when we built the operations.

Just to add to that, the team has -- already has moved over to Mandatum 1.5 years ago, and Bill is the only guy who moves back to Sampo. But then it's, of course, up to [indiscernible] Sampo what they are doing.

Just following up on that note on the [ IF ] side. I don't know if you this you recall, but in the prospectus, it was said something about an [indiscernible] agreement, a distribution agreement. I don't know if that was the risk product sold there or something. But it seems like that was sort of -- or out to be changed very soon or moving out or anything. It was some kind of risk areas there. So could you just shed some light, what is [ IF ] doing for you, are they selling something? Are the distributor? Or is it just these asset management products that you do for them?

If I may answer. So what we have done with [ IF ] we have had cooperation in the commercial side, which is over the years, it has went down. It's very, very small at this point. So it's not really affecting our corporate side numbers. What we have done in the private side is that we have -- [ IF ] it's selling its package personal line in Finland, and we have provided the pure debt cover to them because they couldn't underwrite that because in Finland, you have to be life insurance license to do -- in order to do that. So we have most of the packages have been over the years, they products and that cover part outside. So that's what we have done with them, that we are currently doing that with them.

As we are quite conservative. We have already deducted that from the CSM. I was mentioned that EUR 130 million CSM related risk policies that is already deducted, nothing has decided, but we want to be conservative in that area.

Good. We have one question from Youdish Chicooree from Autonomous Research about capital generation about what I guess an annual capital generation might be on a normalized investment assumption, and I appreciate it's going to be difficult for you to give a number here. But I guess if you could talk through the moving parts a little bit on how to think about it, that might be helpful?

Okay. So when it comes to own funds generation in that part. So starting point is mark-to-market yield that we are expecting, 5.9%. And then it's, of course, up to everybody's view that what they're expecting from the private equity and private credit assets and so on. But let's say that we end up to 6.5% or whatever, no mass return. And then we have this discount rate -- likely the discount rate. We have shown that curve somewhere in the appendix or somewhere there, if that is roughly 3% -- 3.5% on average. Then if we assume that there will be nothing dramatic when it comes to future discount rates, then asset return 6% or 6.5%. I don't remember anymore, okay, 6.5%. And then cost of liabilities, this unwinding cost 3.5%. And then, of course, if interest rates are moving in line with the forward rates and change in discount rate is 0 in that sense when it comes to costing -- cost of liabilities. And then another element when it comes to this organic capital generation was that SCR reduction due to business evolution and as mentioned, we are expecting that to decrease as capital requirement is now when it comes to the portfolio capital requirement is around 30% less than it was at the year-end. So also that SCR reduction and how much we expect capital to be released that will also decrease around 30% or some of that.

All right. One question on the risk life fee business for corporate customers. Can you explain what that relates to?

So the business model is so incorporates, we are doing the pure risk life mainly that covers disability, maybe short-term disability. We are not actively underwriting health insurance. So those are like pure life insurance company products and onetime payment more or less. And what we are doing with corporates is, I guess, mainly, we are selling the coverage [Technical Difficulty] Okay, yes. Now it's working. Thank you. So mainly to key people in the companies, companies are buying the coverage, which we are underwriting and -- but they are also growing business that many companies because of lack of competent employees, they are buying the coverage for the whole company. So all employees. We just made -- I'm sure if I can use that as a reference, but one of the largest companies in Finland, they insured 6,000 of the -- more than 6,000 of the employees with our coverage, and so the whole company employees are coverage with our debt cover and disability. So that's what we are doing. It's pure risk life, and it's a good margin business to us. And we are on that side, that -- with that business, we are not only competing with Finnish providers, we are also competing with international providers. And we do also pooling with IGP in Europe in Finland, so.

All right. From what I can see now on the online questions. I think we've covered what we can cover pretty much. Any final questions from the room on. Ulrik?

Yes. Going back to the with-profit books again, your sort of your coverage for expenses as well as risks in those -- in the good old days, we had the investment return, administration results and risk results. So 2 part of those were sort of covered by sort of you've been given premiums in the past. So you had sort of a provision for that going forward and those 2 are on your own risks. So how should we read your sort of provision or coverage when it comes to risk on having too high inflation or having disability and long levity above those numbers that you have provided so far. So what's the risk on those portfolio even though that's going down the road, so it's easing, but how should we read those 2 risks going forward and maybe the next 5 to 10 years?

Yes. Okay. Part of those will be, okay, economically, it's totally same, but part of those will be -- will go through CSM and so on. So it was not totally go directly to the profit and loss. But that's -- we will present sensitivities related to liabilities and those sensitivities also -- that kind of sensitivities that we should consider -- but anyway, the main sensitivity is when it comes to discount rate, that is by far the biggest one.

Good. Everyone happy. Perfect. All right. I think that concludes today's event then. Thank you very much, everyone, for listening in and attending, and for making the effort, and we look forward to seeing you on the road. Thank you.

Thank you.

Thank you.