Report of the Board of Directors

Report of the board of directors

Fennia Life Insurance Company’s result for 2018 was good. The company’s expense ratio improved compared to the previous years. Returns on investments were lower than they were in the comparison year due to the challenging market environment.

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

Insurance business

Fennia Life’s total premium income, before reinsurers’ share, amounted to EUR 164.1 million (EUR 166.7 million). Of the company’s total premiums written, life insurance accounted for EUR 129.9 million (EUR 132.2 million) and pension insurance for EUR 34.2 million (EUR 34.4 million). Premiums written on unit-linked insurances amounted to EUR 126.6 million (EUR 126.9 million), accounting for 77 per cent (76 %) of total premium income. Premiums written on regular premium contracts stood at EUR 54.2 million (EUR 53.9 million), accounting for 33 per cent (32 %) of total premiums written.

Claims paid totalled EUR 95.5 million (EUR 104.4 million). Surrenders amounted to EUR 44.8 million (EUR 47.4 million). The repayment of benefits amounted to EUR 3.1 million (EUR 5.5 million). Pensions were paid in the amount of EUR 37.8 million (EUR 36.2 million) and death and disability benefits in the amount of EUR 5.8 million (EUR 11.4 million).

Operating expenses totalled EUR 14.8 million (EUR 14.8 million). The company’s expense ratio was 90.2 per cent (92.1 %), including the fee and commission income from funds which form the investments of the unit-linked insurance.

The total return on with-profit insurance savings varied between 0.6 and 4.5 per cent in 2018, depending on the line of insurance and quarter of the year. Client bonuses granted totalled EUR 0.9 million, of which EUR 0.9 million was funded from the provisions for future bonuses reserved earlier.


The company’s return on investments at current values amounted to EUR 17.8 million (EUR 24.8 million), i.e. 2.4 per cent (3.3 %) on the invested capital. The company’s net investment income was EUR 39.4 million negative (EUR 70.7 million positive), of which unit-linked insurances accounted for EUR 58.3 million (EUR 54.5 million positive) of the negative net result.

At year-end, the current value of investments stood at EUR 761 million (EUR 767 million). Bonds and long-term fund investments accounted for 46 per cent of the investment portfolio, and money market investments and deposits for 28 per cent. Shares, equity fund investments and capital trusts accounted for 12 per cent, real estate investments for 13 per cent, and loan receivables and other investments for one per cent. Assets covering unit-linked insurances grew to EUR 1,027 million (EUR 1,018 million).

Distribution of Fennia Life’s investment portfolio 31.12.2018 EUR 761 (767) million

Return on investments 2.4 (3.3) %
Sarake 1
Other debt securities28.4
Shares and participations12.2
Real estate investments12.9
Other investments1.0

Ancillary activities

Fennia Asset Management is authorised by the Finnish Financial Supervisory Authority (FIN-FSA) to operate as a manager of alternative investment funds. The authorisation means that Fennia Asset Management can act as the asset manager and clearing house for the alternative 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 24.2 million (EUR 22.3 million), and the Group’s operating profit was EUR 23.1 million (EUR 20.4 million). The company decreased the interest rate supplement reserved previously by EUR 10.4 million and the reserve for future bonuses by EUR 0.9 million. EUR 3.8 million in provisions for future bonuses was transferred from the comparison year’s result to the technical provisions. At year-end, the supplementary provision for the guaranteed interest rate stood at EUR 114.7 million.

Administration and staff

The members of Fennia Life’s Board of Directors until 1 October 2018 during the year under review were: Group CEO Antti Kuljukka (Chairman); Matti Ruohonen (Vice Chairman); Juha-Pekka Halmeenmäki; and Deputy Managing Director Seppo Rinta. The members of Fennia Life’s Board of Directors after 1 October 2018 were: Group CEO Antti Kuljukka (Chairman); Matti Ruohonen (Vice Chairman); Juha-Pekka Halmeenmäki; and Chief Actuary Simo Sarvamaa.

The Board of Directors held a total of 11 meetings during the year under review. The attendance rate of the members was 94 per cent.

Alexander Schoschkoff acted as the company’s Managing Director.

The company employed an average of 56 people (52) in 2018.


The starting point for remuneration in the Fennia Group is to provide encouraging, fair and reasonable remuneration to management and personnel that is in line with the short- and long-term interests of the Group and Group companies. The remuneration schemes are based on achieving pre-defined targets that are derived from the Group’s strategic targets. In order to achieve this objective, remuneration principles (including a pay policy) have been drawn up for the Group. Fennia Group’s policies define all of the principles related to salary and rewards for Fennia employees. At Fennia, the remuneration principles and the pay policy are viewed as 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 remuneration principles and pay policy also define 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 building and developing remuneration schemes, the Group’s and the company’s business strategy, targets and values are taken into account, as are the company’s long-term interests, risk management and business continuity, and business practices that are professional and in line with healthy and prudent business principles. The 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 during the period 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

On 1 April 2018, Fennia Life sold the entire share capital of its wholly owned Fennia Asset Management Ltd to Fennia Mutual Insurance Company in an inter-group transaction. Fennia Asset Management is included in Fennia Life’s consolidated financial statements for the first three months of the financial year.

At year-end, Fennia Life Group comprised twelve real estate companies wholly owned by the company.

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.

A risk management executive group operates within the Group to prepare, steer and co-ordinate tasks related to risk and solvency management and to communicate related information. A group-level asset-liability committee (ALCO) has been established for the insurance companies’ balance-sheet management.

Investment activities are based on the asset-liability management (ALM) plan that is approved by the company’s Board of Directors and 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 at the latest on 3 June 2019 on Fennia’s website

Outlook for the current year

We expect the result for 2019 to be at the same level or better than the 2018 result. The result will, however, depend on the development of the capital markets, as a large part of the company’s premiums earned are tied to the development of the insurance savings. Investment income is expected to be lower than it was in 2018.