Report of the Board of Directors

Report of the board of directors

Fennia Life Insurance Company’s result for 2017 was good. The company’s expense ratio improved compared with the previous years. Investment income fell short of the previous year’s level, but still reached a good level in the challenging market environment.

Fennia Life is a wholly owned subsidiary of Fennia Mutual Insurance Company.

Insurance business

Fennia Life’s total premium income, including the reinsurers’ share, decreased to EUR 166.7 million (EUR 207.1 million). Of the company’s total premiums written, life insurance accounted for EUR 132.2 million (EUR 170.2 million) and pension insurance for EUR 34.4 million (EUR 36.8 million). Premiums written on unit-linked insurances decreased to EUR 126.9 million (EUR 165.0 million), accounting for 76 per cent (80%) of the total premium premiums written. Premiums written on regular premium contracts stood at EUR 53.9 million (EUR 57.0 million), accounting for 32 per cent (28%) of the total premiums written.

Claims paid rose to EUR 104.4 million (EUR 90.7 million). Surrenders amounted to EUR 47.4 million (EUR 40.4 million). The repayment of benefits amounted to EUR 5.5 million (EUR 6.4 million). Pensions were paid in the amount of EUR 36.2 million (EUR 34.6 million) and death and disability benefits in the amount of EUR 11.4 million (EUR 5.1 million).

Operating expenses amounted to EUR 14.8 million (EUR 14.0 million). Taking into account fee and commission income from funds which form the investments of the unit-linked insurance, the expense ratio was 92.1 per cent (94.8%).

The total return on with-profit insurance savings varied between 0.6 and 4.5 per cent in 2017, depending on the line of insurance and quarter of the year. Client bonuses granted totalled EUR 1.2 million, of which EUR 0.6 million was funded from provisions for bonuses reserved earlier. A sum of EUR 3.8 million was reserved in the technical provisions for future bonuses.


The company’s return on investments at current values amounted to EUR 24.8 million (EUR 30.5 million), i.e. 3.3 per cent (4.3%) on the invested capital. The company’s net investment income was EUR 70.7 million (EUR 91.8 million), of which unit-linked insurances accounted for EUR 54.5 million (EUR 62.7 million).

At year-end, the current value of investments stood at EUR 767 million (EUR 756 million). Bonds and long-term fund investments accounted for 48 per cent of the investment portfolio, and money market investments and deposits for 20 per cent. Shares, equity fund investments and capital trusts accounted for 19 per cent, real estate investments for 13 per cent, and loan receivables and other investments for 1 per cent. Assets covering unit-linked insurances grew strongly to EUR 1,018 million (EUR 903 million).

Distribution of FenniaLife’s investment portfolio 31.12.2017 EUR 767 (756) million

Return on investments 3.3 (4.3) %
Sarake 1
Other debt securities19.6
Shares and participations19
Real estate investments13.0
Other investments0.6

Ancillary activities

During 2017, Fennia Asset Management Ltd was granted authorisation by the Financial Supervisory Authority to act as a representative for the manager of alternative investment funds. The authorisation means that Fennia Asset Management can act as the asset manager and clearing house for the alternative investment funds managed by it. Fennia Life made the necessary amendments approved by the Financial Supervisory Authority to its Articles of Association to enable the above-mentioned activities.


The company’s operating profit was EUR 22.3 million (EUR 12.8 million). The Group’s operating profit was EUR 20.4 million (EUR 10.2 million). The company transferred EUR 3.8 million from the result for the financial year to future bonuses and decreased the interest rate supplement reserved previously by EUR 11 million. In the comparison year, an interest rate supplement of EUR 20 million was transferred from the result to the technical provisions. At year-end, the supplementary provision for the guaranteed interest rate stood at EUR 125 million.

Administration and staff

During the year under review, the members of Fennia Life’s Board of Directors until 31 March 2017 were: Mikael Ahlbäck (Chairman); Matti Ruohonen (Vice Chairman); Managing Director Antti Kuljukka; CEO Juha-Pekka Halmeenmäki and Deputy Managing Director Eero Eriksson. Mikael Ahlbäck’s and Eero Eriksson’s term in the Board of Directors ended on 31 March 2017. As of 1 April 2017, the members of the Board of Directors were: Group CEO Antti Kuljukka (Chairman); Matti Ruohonen (Vice Chairman); CEO Juha-Pekka Halmeenmäki and Deputy Managing Director Seppo Rinta.

The Board of Directors held a total of 12 meetings during the year under review. The attendance rate of the members was 98 per cent.

Seppo Rinta acted as Managing Director until 31 March 2017, and Alexander Schoschkoff since 1 April 2017.

The company employed an average of 52 people (53) in 2017.


The starting point for remuneration at Fennia Group and thus also at Fennia Life is to provide encouraging, fair, and reasonable remuneration to management and personnel that is in line with the short- and long-term interests of both the Group and Group companies. Fennia Life’s remuneration schemes are based on achieving pre-defined targets that are derived from the company’s strategic targets. Fennia Group’s pay policy defines the principles related to salary and rewards. At Fennia, the pay policy is a whole that is influenced not only by an interesting and sufficiently challenging field of tasks, but also by good leadership, personnel benefits and monetary rewards. The pay policy also defines how each Fennia employee can influence the development of their salary by developing themselves and their work, as well as the responsibilities related to salary and rewards within the company.

In line with the remuneration principles, rewards have been built in such a way as to prevent unhealthy risk-taking. Fennia’s remuneration schemes include, among other things, pre-defined maximum amounts of remuneration and a force majeure clause, which gives the Board of Directors the right to amend the schemes if the company’s financial position is jeopardised or if the circumstances have otherwise changed considerably. Remuneration decisions are made according to the ‘one above’ principle; i.e. the person making the decision is the supervisor of the supervisor of the employee in question.

Group structure

Fennia Asset Management Ltd, in which the company has a 100 per cent holding, is included in the consolidated accounts.

In addition, at year-end, Fennia Life Group included twelve real estate companies wholly owned by the company.

Fennia Asset Management Ltd

The company’s profitability improved during the financial year. The profit for the financial year was EUR 1.0 million (EUR 0.8 million). The company’s capital and reserves grew and at the end of the financial period amounted to EUR 3.1 million (EUR 2.1 million).

The company’s solvency at the end of the financial period was good, the solvency ratio was 24.2 per cent and the company’s own funds amounted to EUR 3.1 million (calculated minimum requirement for own funds is EUR 1.0 million).

The amount of Group external client assets managed by Fennia Asset Management grew by 26 per cent, standing at EUR 242 million (EUR 192 million) at year-end. The new capital was mainly allocated to discretionary asset management and to the new special investment fund established on 12 September 2017, Fennica Building Plot Fund, non-UCITS. The low interest rate level and expensively priced equity market steered investors’ focus towards real estate investments.

Group investment assets were transferred under the management of Fennia Asset Management during 2017. As a result, the amount of Group internal client assets grew to EUR 2.6 billion.

Risk management and solvency management

The risk management and solvency management principles that are approved by the boards of directors of Fennia Group companies serve as the foundation for Fennia Life’s risk management. The steering of the risk management system is based on a three-defence-line model, which is described in more detail in the note concerning risk management.

The Group has a risk management executive group to prepare, steer and co-ordinate tasks related to risk and solvency management and to communicate information.

Investment activities are based on the investment plan approved by the Board of Directors, which determines, among other things, the allocation of investments and the rights and responsibilities of those involved in investment activities. The company’s risk-bearing capacity is taken into account in determining the allocation of investments.

A note to the financial statements concerning risks and the management of risks and solvency has been drawn up, detailing Fennia Life’s most significant risks and general principles concerning risks and solvency management.

Solvency and Financial Condition Report

Fennia Life’s Solvency and Financial Condition Report will be published on Fennia’s website on 19 June 2018 at the latest.

Outlook for the current year

The good economic development is expected to be reflected positively in Fennia Life’s business. We expect the result for 2018 to be on a par with the result for 2017 or even better. The investment result may differ significantly from the estimate if the market situation changes. The current discussion on plans concerning the taxation of savings products may weaken demand for such products.