Pohjola Interim Report 132004 Eero Helivaara, President and CEO

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PohjolaInterim Report 1-3/2004Eero
Heliövaara, President and CEO
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Pohjola Q1/2004

• Positive performance in all business areas
  operating profit EUR 150 million (EUR 41
  million).
• Profitability in non-life insurance improved
  further premiums earned increased and total
  expenses declined.
• Clear improvement in investment services business
  volumes and profitability positive results.
• Net investment income EUR 165 million (EUR 70
  million). Disposal of the remaining Skandia
  shares generated EUR 35 million in gains on
  realisation.
• Pohjola signed a preliminary agreement with Suomi
  Mutual on the acquisition of life insurance
  business from Suomi Mutual.
• Pohjola acquired full holding of Seesam non-life
  insurance companies in the Baltic States.

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Profitability of non-life insurance

• Q1/2003 Q1/2004 Change
• Premiums earned MEUR 167.1 MEUR 173.9 4.1
• Combined ratio improved (IAS) 108.4 101.9 6.6-
  points
• Loss ratio down 86.2 82.6 3.6-points
• Expense ratio improved 22.2 19.3 2.9-points
• ROA, p.a. ) -2.8 13.0
• ROE, p.a. -24.7 40.9
• ) Return on assets at current values

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Expenses, non-life insurance (rolling 12 months)
EUR million
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Expenses, non-life insurance (rolling 12 months)
Expense ratio
Cost ratio
6
Premiums earned(rolling 12 months)
EUR million
7
Premiums writtenDomestic direct business
EUR million
3.7
3.9
8.4
5.7
8.8
-18.7
6.6
9.8
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Combined ratio by line of insurance
(IAS))Domestic direct business, rolling 12
months
) International accounting standards
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Combined ratio (IAS)(rolling 12 months)

99
)
)
Target 95 - 100
) including effect of change in mortality model,
4-points
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Investments of non-life insurance

Investment portfolio March 31, 2004 EUR 2 407
million
Development of investment mix
Breakdown of equity portfolio Finland 52 Other
euro area 23 Other parts of Europe 7 USA
10 Emerging markets 6 Japan 2 Duration,
fixed-income portf. 5.2 yr. Risk
rating AAA 70.0 AA 17.4 A 7.2 BBB 4.7

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Solvency of non-life insurance

EUR million
178
179

121
99
94
93
Solvency ratio
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Summary of investment services function

• Volume and performance of investment services
  segment improved. Operating profit for January -
  March before depreciation on consolidation
  goodwill totalled EUR 1.7 million (EUR -2.6
  million).
• Assets under management in mutual funds rose
  further and amounted to EUR 1 189 million (EUR
  579 million).
• Pohjola and Suomi groups transferred their
  investment operations, a total of EUR 9.5
  billion, to Pohjola's investment services
  function.
• Decision on launching life insurance business.

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Assets managed by Fund Management
CompanyQuarterly
EUR million
105
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Life insurance business

• February 2004 Preliminary agreement on the
  transfer of life insurance portfolio and life
  insurance business of around EUR 1 billion to a
  subsidiary to be established and fully owned by
  Pohjola. Acquisition price EUR 23 million.
• March 2004 Meeting of the Policyholders'
  Representative Assembly of Suomi Mutual approved
  the preliminary agreement.
• May 2004 Licence was granted for the new company
  to transact business.
• June 2004 Final handling by the Policyholders'
  Representative Assembly of Suomi Mutual.
• January 2005 Planned transfer of insurance
  portfolio. Around 230 employees to transfer to
  Pohjola as old employees.

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Holdings investments
March 31, 2004, total of EUR 439.6 million
Investment mix

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Net asset value and share price

6.64
9.46
19.45
6.51
6.97
In IAS accounts, equalisation provision included
in capital and reserves as of 2005
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Groups major shareholdings
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Outlook

• Favourable prospects for the near future in
  non-life insurance and investment services
  business.
• Profitability in non-life insurance is expected
  to improve in 2004 because of increased premiums
  written, lower total expenses, and more efficient
  risk selection methods.
• Following positive volume development and
  reorganisation of operations in investment
  services business, profitability is expected to
  improve clearly from the previous year.
• More detailed targets for the dividend policy and
  investment services will be disclosed in August.