Finnish general insurance

Our Finnish branch sells insurances to private household customers and small enterprises under the brand name of TrygVesta Finland and Nordea Vahinkovakuutus. Insurance policies are sold by Nordea’s branches, our own sales force and call centres, car dealers and via the Internet. The Finnish branch has around 150 employees.

Broader distribution platform lifting sales
Gross earned premiums in Finland rose by 41%, or DKK 103m, to DKK 354m driven by an increase in sales. In 2008, the Finnish business sold around 160,000 insurance policies, as against approximately 100,000 policies in 2007. The sustained high level of sales was achieved through a targeted effort to build and strengthen the sales channels. The rapidly growing portfolio is attributable partly to sales made through Nordea, but to an increasing extent also to sales made through own sales channels. Such sales account for around three quarters of sales today, a large part of which concerns additional sales to customers originally introduced by Nordea. Sales via the Internet totalled 6% of aggregate sales, a new record in terms of the number of policies.

The portfolio totalled DKK 432m at 31 December 2008 and grew by 45% in 2008 from DKK 299m at 31 December 2007. The number of customers was approximately 130,000 at 31 December 2008.

The market share was 4.4% at 31 December 2008 in terms of households, as compared with 3.6% at 1 January 2008.

The potential for sales of insurance policies to small commercial customers is strong in Finland, as Nordea has a strong position in this customer segment. Sales through own channels significantly outperformed expectations in 2008.

The strong growth in the Finnish business and the plans for continued growth give rise to an ongoing requirement for attracting qualified employees. The number of employees rose in 2008 from 127 to around 150. To this number should be added 40 independent insurance agents.

Claims ratio improved
The claims ratio, net of ceded business was 73.2 in 2008 against 75.3 in 2007. Despite a generally satisfactory claims performance, there are a few lines, which, based on an overall evaluation of the competitive situation and the premium and profitability levels, require premium increases. These increases will be implemented in 2009.

The effects of these price increases will begin to materialise from the second half of 2009, but will not feed through until 2011.

Expenses
The high sales level added pressure to expenses, which rose from DKK 125m in 2007 to DKK 154m in 2008. Costs are primarily driven by selling commissions, but as the proportion of policies sold by the unit’s own call centre increases, the charge on the expense ratio will be gradually reduced for the benefit of future earnings.

In 2008, TrygVesta signed a new agreement with Nordea on settlement of commission regarding policies sold through Nordea. As a result of this agreement, it is now possible to accrue commission over the first year of the policy, as it is actually a prepayment to Nordea, as compared with the previous method of charging commission to the income statement at the time of writing the business.

The expense ratio was 43.5 in 2008, compared with 49.8 in 2007.
 
Combined ratio
The combined ratio was 116.7 relative to 125.1 for 2007. In the private business, the combined ratio was 101.5 against 106.6 for 2007. Looking ahead, the private business, which is now well balanced, will focus on reducing the combined ratio and thus on good profitability.