LocalTapiola Group’s financial statement presentation 1 January–31 December 2022: Business progressed on stable and profitable track – challenging investment environment weakened total result

LocalTapiola Group’s non-life insurance premiums written continued to grow. Resumption of economic activity and of mobility after the pandemic increased claims expenditure. Uncertainty in the operating environment continues but, due to its strong solvency, LocalTapiola Group was able to support owner-customers by providing competitive pricing and high-quality services throughout Finland.

• Premiums written, direct non-life insurance: EUR 1,308 million, + 3.2%
• Premiums written, life insurance: EUR 429 million, – 10.8%
• Assets under management (gross): EUR 26.6 billion
• Customer bonuses: EUR 135 million, + 3.5%
• Number of customers: 1,588,000, + 1.2%
• Non-life insurance combined ratio 90.6%, cost ratio 30.2%
• LocalTapiola Group’s operating result: EUR 194 million, – 50.0%
• LocalTapiola Group’s total result: EUR –470 million, – 160.7%

Comment by CEO Juha Koponen:

“2022 was an exceptional year. The beginning of the year was still marked by the pandemic, but soon Russia’s war of aggression in Ukraine, the markedly increased energy prices, inflation that was fuelled to fierce levels and the heavily increased market interest rates all led to major uncertainty in the financial markets and in the economy. However, LocalTapiola Group’s solvency has remained strong. A financial sector enterprise, we have for our part been able to bring stability into society while providing security to our owner-customers.

Due to poor performance of the investment markets universally, LocalTapiola Group’s total result fell clearly short of last year, yet our core business continued on a stable and profitable track. Premiums written in direct non-life insurance increased 3.2 per cent. Our multichannel service model, set out in our strategy, has proved to meet customer service needs in an excellent fashion. We provide service to our customers online, by telephone and face to face through Finland’s most extensive network of offices. That our model performs well has been evident in increased customer numbers. Additionally, the growth in premiums written was also affected by a high customer retention rate, good sales activity and the investments made in marketing.

We have continued to invest heavily in system reforms, the digital element, and automation. All of these have contributed to our cost ratio. With many of the reforms, work is still ongoing, aiming to achieve improved multichannel customer service.

Last year, in non-life insurance, we paid out EUR 816 million in claims and, in life insurance, EUR 366 million. Claims expenditure has increased following recovery of economic activity and Finns’ resumed mobility as the effects of the COVID-19 pandemic subside. A return to more normal behaviour is illustrated by developments such as growth in the demand for travel insurance policies.

Our strong operational development is not possible without highly skilled and committed personnel, who deserve all due credit. Despite a challenging year of many new changes, our personnel’s measured job satisfaction recorded further improvement.

Mental well-being remains an ever more integral element in nurturing the well-being of our staff and customers alike. In 2022, we continued to provide low-threshold mental health services to personnel, while making public customer value propositions regarding mental health issues and insurance.

In the year gone by, LocalTapiola crystallised its ownership strategy. As a mutual company, our owner intent places emphasis on a customer-oriented approach, increasing customer benefit, and long-term and responsible business.

The year that has begun will see our operating environment remain challenging. This will accentuate a flight to safety, while recent years have shown that not all Finns enjoy an adequate financial safety net. Due to its strong solvency, LocalTapiola Group is in a position to implement the owner intent by supporting its owner-customers through, for example, competitive pricing and high-quality services throughout Finland.

Furthermore, the situation of businesses remains challenging. For some of them, the outlook is positive, yet a shortage of labour causes challenges. For others, the outlook has deteriorated and intense cost pressures together with increased financing costs weaken the chances of economic success. In spite of this uncertainty, demand for corporate insurances has remained good.

Strong market volatility has led to major uncertainty among investor and saving customers. Decisions to invest are being made carefully and cautiously. However, the steep increase in market interest rates has made many investment products attractive again, enabling a number of diversification benefits for investors.

Additionally, LocalTapiola’s new strategic responsibility goals that promote the well-being of all Finland also guide the Group’s donations and partnership activity. In 2022 the Group companies provided a total of EUR 2.6 million in support to communities, of which EUR 620,000 was donated to institutes of higher education. To prevent evolving risks, donations were focused particularly to promote mental health, as well as on climate change adaptation. We supported Ukraine with donations provided both to the crisis area and in Finland.”

Read the full financial statement presentation here.