Managing Director’s Review
2017 was the 19th year of operations for Fennia Life. Our result was good, and our business developed moderately. Measured in terms of expense loading, operating income grew more than 10 per cent on the previous year, and the company’s expense ratio improved to the best level in the past decade of operations.
The company’s solvency has improved significantly during the past two years, and the SCR ratio, which describes solvency, exceeded 200 per cent at the turn of the year, which can be considered a strong figure. However, the current solvency framework only allows lower investment risk-taking than previously, and the still-low interest rate level accentuates the impact of this on the returns received from investing Fennia Life’s balance sheet assets.
Fennia Life’s business covers voluntary life, pension and savings insurance and insurance asset management as part of the Fennia Group’s service offering. The amount of insurance savings increased, although total premium income was clearly lower than in the previous year due to weaker investment insurance sales – this indicates that the strong growth trend seen in these products during previous years has taken a turn.
The current positive development of Finland’s economy is expected to be reflected in Fennia Life’s business. In 2017, the structures of the Fennia Group were renewed, and this renewal is expected to increase the sale of Fennia Life’s products by the Fennia Group.
The nervousness on the capital markets at the beginning of the year is expected to continue, and the low interest rate level will probably weaken returns on investments for the current year, too. With respect to investment insurance and savings products, which have been the company’s strongest-growing products in recent years, we also fear that the taxation report, currently being prepared and due for completion after the first quarter, may reduce demand for these products in the future.
The Group strategy for 2018–2022, launched at the end of 2017, sets the following strategic objectives: increase in the corporate customer base, efficient management of household customers, personnel’s capacity for renewal and the maintenance of good solvency. The needs and behaviour of our customers are changing with the development of technology, demography and the changes in companies’ operations and their internationalisation. Responding to these challenges is a precondition for our continued operations.
In this strategy period, Fennia Life’s main goal will be to increase the volume of business and the expense loading and to significantly improve the expense ratio to secure the company’s price competitiveness now and in the future.
Achieving this goal will require success in increasing the volume of our operations and further improvements in the efficiency of processes through automation. Through digitalisation we also seek to meet customer demands concerning online transactions and customer service. New web services will also be launched during the current year.
Finally, I extend my humble thanks to our customers whose needs are the reason we exist. Our vision is to offer the best customer experience. This means a lot of work for us. Our personnel and administration deserve thanks for their excellent work and co-operation in 2017.