Good afternoon, everyone, and welcome to this investor introduction to Mandatum. My name is Sami Taipalus, and I am Head of Investor Relations at Sampo Group. On the agenda today, we are going to go through Mandatum's business model and medium-term financial targets ahead of the planned listing on the second of October. The event will feature presentations from management, as well as two Q&A sessions, in which you'll be able to participate both live here in the room and online via question boxes. If you're following the event online, you can submit your questions already during the presentations. The event today will be recorded, and the recording will later be available on sampo.com. With that, I hand over to our first speaker, Mr. Patrick Lapveteläinen, Chair of the-- Lapveteläinen, apologies, Chair of the Mandatum Board.
So good afternoon, everyone. We would like to welcome you to the Mandatum's first ever investor event. We appreciate that you are taking the time to join us today, and I'm glad to see you so many attending, both in person and also virtually online. For those who don't know, my name is Patrick Lapveteläinen, and currently I'm the Chief Investment Officer of Sampo for the next two weeks. Then I will be moving over to Mandatum to become the full-time Chair of the Board when the demerger is completed. Myself, I have a long history with Mandatum. I have been on the Board of Directors since 2002, and I've been responsible for our with-profit investment since then also. But before we dive into the Mandatum business, just a glance and a short recap of the demerger process and why we stand here today.
Background of the demergers, as you surely know, goes back to 2020, when Sampo made a strategic decision to concentrate on property and casualty insurance. Since then, Sampo has acquired 100% of Hastings, U.K.-based P&C operator, and divested the entire stake in Nordea Bank. After these two transactions, it became quite obvious, of course, that Mandatum's business does not fit into the long-term P&C insurance strategy of Sampo, and therefore, the board initiated a strategic review back in December last year to look at the strategic alternatives for Mandatum. After the strategic review, the board decided to announce in end of the March an intention to demerge Mandatum from Sampo, as the board's assessment was that Sampo and Mandatum would create more value to shareholders as independent-listed companies.
Sampo AGM approved the demerger in May, and the final decisions by Sampo Board was made yesterday. The demerger will be effective as of the first of October, and the first trading day on the Helsinki Stock Exchange will be on Monday, the second of October, and the ticker will hopefully be Mandatum.HE. Sampo and Mandatum do not have any significant synergies, and Mandatum has always operated as an independent company from Sampo. Demerging of the operations are not expected to be difficult, and we have prepared and planned for this already for a long time. Timing-wise, we think this is a perfect moment for Mandatum to go its own road as an independent company and continue to execute on its growth strategy. Okay, that's about the demerger. Let's jump into today's business and presentations then.
Mandatum is one of the leading financial services in Finland across life insurance and asset management, and we are excited to be here and walk you through today our business model, what we have achieved so far, and where we see our strategic focus going forward. Mandatum's today's business proposition consists of two different businesses: the capital-light unit-linked insurance and asset management offering that's in the growth mode, and then the with-profit business that's in run-off and releasing capital. I would like to highlight here on this slide three core strengths or takeaways we believe that are important and stand out. Proven foundation.
That means that we have executed a strategy for over 20 years, where we have shifted from business from capital heavy into capital light with an excellent track record, built a strong brand in unit-linked insurance and asset management, and also built a very strong management team. We have a clear growth path on our capital light offering based on our proprietary distribution capabilities. And last, but not least, our balance sheet and solvency is very strong, and we will generate capital and return that to our shareholders. So all in all, I'm convinced that Mandatum will thrive independently, given the opportunities we see ahead of us, and hopefully, our presentations today proves it also. And with that, just a brief few words on our team.
As you can see here, we have a very experienced management team, and we have been doing this for a long time. We are all present here today and are available then in the Q&A sessions. So thank you. This was the opening remarks from me, and I'll leave it over to Petri, please.
... Thank you, Patte. Welcome on my behalf also. It is nice to be here once again. I haven't been in investment days or capital market days for many, many years. I remember when we have this banking operation within Sampo Group, and those time we have a lot of investors meeting. But since then it has been more quiet, so it's really nice to be here today and present our figures to you. As you saw, my name is Petri Niemisvirta. I'm CEO of the Mandatum, and, like Patte said, long period of time here in Mandatum and Sampo Life, and so on, companies, before Mandatum.
So this is exciting times ahead of us to be as an independently listed company, which hasn't happened before. Few numbers. I will not go through all the numbers on my slides. There's a bunch of the slide numbers, and I will try to describe the main takeaways from each slide, and you can ask more in the Q&A session if you want to dig deeper with certain numbers and issues on my slides. Which I'm really proud of is our EUR 11.2 billion customer assets under management, which was the number after the first six months in this year. What is really good is this number close to that, EUR 1.4 billion cumulative client net flows, so inflows and outflows, and net of that.
And so in 2021 to H1 2023, EUR 1.4 billion. I will touch these issues later. I have another picture of that. Increasing speed of collecting money. We are an asset-gathering business, really, with the different tools we have, and we have been, I guess in quite successful lately, and of course already 15 years collecting money and also keeping the money, and creating huge really good NPS and customer satisfaction over the years. What is Mandatum? How we do our business? We really have two different business areas, and those are totally different. As Patte mentioned, we already ended our with-profit business more than 20 years ago.
I was nominated as a CEO, 2001, and one of the first things we did on that time was merger with Sampo Mandatum, old Mandatum. At that time, we stopped to sell any more with-profit. As some of you might know or all, it takes years and years to stop with-profit growing, and, but we are the few, few of those companies in Europe, really, I guess, who has managed to stop this, and, and really not just to stop this, we have managed to decrease the liability on that side. As you can see, since 2014, 52% down in our with-profit from EUR 5.1 billion to EUR 2.4 billion , after six months this year. So very predictable, with-profit book, and a lot of capital releases ahead of us.
What we have said, what we have forecasted when it comes to with-profit, more or less, we have keep our promises, and our forecasting has been very accurate in the past, and we believe that there are no changes on that side as well. So we believe there will be a lot of capital releases going forward, as it has been in the past. So at the same time, what we have done during the last 15 years especially, or more than 20 years, at the same time, we have put a lot of effort to increase our capital-light business. And we do that capital-light business in three different divisions. Our backbone, our traditional backbone in our business is corporate.
I will tell more in coming slides how we do our business in corporate, why it's so important to us, why it's so important our growth, growth, when we talk about also the institutional wealth management side. Unit-linked liabilities, since 2014, from 5.3 to 10.8. The highest growth rate has been in wealth management, wealth management side. How is the Finnish market? What kind of market we are doing our business? Mandatum is mainly, at this point, Finnish company. Most of our revenues, most of our profit, most of our customers are in Finland. So it's important to understand where we stand in when it comes to market as well. So the wealth management and unit-linked capital light business area has been growing since 2008....
Last 15 years, more or less, 15% annually. So, double-digit numbers, so, very good growth. At the same time, all policies in unit-linked, in life insurance industry, only 5% growth. So the capital-light unit-linked business is what is really growing and what the companies are doing. At the same time, Finnish institution, meaning fund management companies, asset management companies, market, estimation is EUR 180 billion, totally 9% growth totally. So even though Finnish economy is not that flying recently, since 15 years, asset management, wealth management, capital-light type of, business is growing. It has been growing. And, there's a lot of things which, says that it will continue. We haven't seen any softening on market or indicators that Finns will be richer, more wealthy.
We have a huge amount of, let's say, large generations, very old now, which is creating some problems to society, but they will leave a lot of properties and assets to their children in going forward. So there will be more wealthy people in the future in Finland as well. So we see the Finland as a good market. And coming slides, I will also show that we are not just looking Finland, we are also expanding our institutional asset management and wealth management business outside of Finland, mainly Nordics and Denmark and Sweden. What is our position then? 2017, 21% market share. Now, after six years or five years, 32%, so 11 percentage points up .
First time ever, we are the largest life insurance company in Finland, bigger than Nordea Life or OP Life. As you can see, this is very consolidated market, so there is no consolidation, coming or in the future on this side. This is the four biggest players. They hold, like, 90% of the market. So this is... But we are well positioned in Finnish life insurance market, as well in asset management market and wealth management market. Some other numbers, our position in corporate life insurance market, we hold, let's say, almost half of the unit-linked group pension business in Finland, so every second policy is underwritten by us. So we are the largest one. And corporate risk life, one-third is our market share on that side.
So as well, it's a good position on that side. So overall, our corporate market position is very strong, and it creates us opportunities to enhance our wealth management business as well. So, what are these divisions, how we are doing our business, and how we can describe them? As I said, corporate business is our backbone, it's our heritage. Most of our customers and customer base is coming also on wealth management side from our corporate relations. As you can see, 70% of our wealth management customers, they have some kind of connections to our corporate business. As we all know, the wealth is created in companies and corporates.
Either you get a lot of salary, bonuses, LTI, STIs, or you sell your company, or you have other ways to make wealthy through your companies. So that's the way we have known this already 15 years ago. This is the way to go. We have extremely good relations to corporate leaders, decision-makers, wealthy people on that side, and we should enhance our business to wealth management side. So how we are planning to go forward is to keep our market position on corporate side. There's still room to grow on that side as well, especially in certain areas like remuneration and personal funds, and so on. But the main thing is to keep the existing really good market position and feed our growth engine, which is our institutional and wealth management area.
So to feed and shift the customers more and more, not just to be the corporate customer, also to be our wealth management customer. Corporate is, it's an important part of our business as well, and it's profitable as well. It's not just a feeder. It's important to understand that in the Finnish market, corporate business is totally different in, I guess, any other European market. One thing which makes us different, the market different, is that this is really sticky money. Once we do new unit-linked group pension policy, by nature, it's sticky. The money stays with us because you can't transfer your asset to another life insurance company. That's very normal in all other Nordics and also all over Europe.
So that is very important to understand that once customers, they have paid to us, they will get their money out once they get their pensions. So there's no transfer market in Finland in that sense. Institutional wealth management, that's really good market position. Lauri will touch this issue more. Scale up platform and expand product offering, those are the things. And one thing I will touch later on is repeat Finnish success story in Sweden and Denmark. We have already some evidence that we can do that, more in the future.
When it comes to our retail, Danske cooperation is really, really something we appreciate, and it's very efficient operation, and it's creating value for both of the parties, so to Danske Bank and us as well. So, few more words about our corporate business, which is our backbone for our growth. We have unique setup how we do our business. We do have something like 20,000 corporate customers in our corporate segment. We are very cautious which kind of companies we are pushing our sales efforts. So, we use a lot of data in order to use our resources, sales resources, right way.
And we offer pension policies which all are unit-linked, so we don't offer any with-profit policies, group risk life policies, and personal funds, and reward and compensation advisory, our remuneration business. And we are acting from the largest Finnish companies to smaller ones as well. So and that unique setup, there is no like this in Finland, so no other player in the market really can say they have all this. Not the bigger big banks or life insurance company, they don't have this whole package. For example, the remuneration, reward, and compensation side, we have the largest offering for corporate customers.
Of course, this has created a very active, proactive way to do things with corporates, that we have extremely high NPS among our customers, which is, of course, one of the reasons why we have so good net flow. There's a very small outflow from our policies. So, 86%, 84%, increase a lot since 2018, for example. And this is just the corporate. We have the same type of numbers also among our customer segments. Corporate unit-linked AUM is growing, but it's more stable, but it's also very sticky, as I mentioned. 6% annual growth since 2020, and we see that we can still grow.
This is the growth business, but if you describe growth business with that, it has to grow like double-digit numbers, then it's not. But it's growing, and once you have that high market share numbers, there's a lot of work to do to keep the market share as well. But this is really important that it gives space our growth in other areas, in wealth management and institutional side. So, how we do our business in Finland? So we have 10 locations all over the Finland, only the big cities. We don't have offices in very small towns or rural areas. We have 50 corporate sales personnel sitting in the same premises with our wealth managers.
So once we have office, for example, mid-Finland, like Tampere, there's under the same manager there is both wealth managers and corporate sales people. So they are doing job together in order to get the, let's say, not just the corporate money, not just the corporate products, everything which we can get out of the customers, so meaning the wealth management as well. So, and, and we have done this with the increasing speed, but there's a lot of room to improve still. But already now we see that this unique concept we have, compared to any other player in the Finnish market, really, is that 70% of new wealth management sales is involving the corporate sales personnel.
So they work how they feed the wealth manager is proving it that it's working. 83% of wealth management assets under management is some kind of connection to corporate segment. This is one example. I will not go to details. There's a lot of details in this slide. But it just shows that there are many ways to get the bigger size of the wallet than we used to have more than 20 years ago or more than 15 years ago. So we did that. We sold our pension policies, risk life, and so on in the past, but that was it. We didn't... that's the issue. How about your investments as a corporate?
How is your wealth management as an individual, as a wealthy person owning the company, selling the company just away from some US-based company, and so on, selling your company to private equity? Now, it's all here. We are combining our relationship in the corporate segment and feeding our wealth management growth at the same time. This is behind our success. If we look at our first six months number this year, we saw net flow around EUR 450 million. One of the reason was really good cooperation between the corporate segment and our wealth management. Especially in ultra-high-net-worth area, we were really getting a lot of good results from our cooperation between two divisions. What I've just told, it's just how the numbers looks then.
Since 2008, from EUR 6.1 billion altogether, but remind you, that was EUR 4.5 billion with profit on that time. Only EUR 1.66 million unit-linked , six billion unit-linked liability on that time. Now, we have EUR 10.8 billion, annual growth 14%. At the same time, with profit down 4% per year, from EUR 4.5 billion to EUR 2.4 billion. So, we have done quite a good job, I think, and now it's time to speed it up going forward. And there's a lot of initiatives we can, we can, we think we can enhance this, this growth path. Customer assets under management development, this is a little bit shorter period of time, since 2020.
If we think about 2020, it was the year of COVID, like 2021. Then 2022 started the Ukrainian war. We haven't got that much help from the market, or even though our investment products and performance has been good, but still only EUR 0.5 billion market movements helping us. Luckily, not negative. But what has been good in those, I would say, difficult times, we have managed to get EUR 1.4 billion net inflows. So it, I think it shows that we can sell even in rainy days.
So, even in a difficult market, we have managed to get new money in, and at the same time, our customers have been happy with our products, our performance, so we have also managed to keep the money, which is as important as, as selling, selling as well. So our net flow has been really good last three years. And it's not just, just, assets under management, which is, of course, in this business, very important to have a lot of assets under management. This is very scalable business, but of course, important thing is, are you getting fees of that, and what kind of fees you are getting? We are very disciplined in our margins.
Even though we have been growing very fast since 2020, for example, we have managed to keep our margins at the same level. So, we are in asset classes, which Lauri will tell more about and describe our business model. We are in asset classes which are naturally a little bit higher fees-based than, like, ETFs and index type of investments. But we are very disciplined, and we are going to be very disciplined in our pricing and margins. So we will not try to get more assets under management just with the price marketing and so on. Our growth, when it comes to fee income, is 21% on institutional wealth management. That's our growth engine.
At the same time, our corporate is growing as well. What has been more stable is our retail, which is mainly our cooperation with Danske Bank. And 1% growth is not big growth, and we see and we hope that there might be some improvement, improvements going forward with Danske Bank, hopefully. But it's fair to say that our view is that the main growth in the future will come from our institutional and wealth management side, as it has been lately. A few words about cost-income ratio. Jukka will tell more about our investments, our platform, and how we see that going forward. I think if we look at the last three years, we have had a lot of change in this company, new people-...
Growth on Mandatum side and a lot of investments to our IT, our portfolio management, and so on. So, I see that it's now we have platform which can increase, so we can take more assets under management in, and so more money in and with that way also improve our cost-income ratio in the future. So to wrap up this all, before I let Lauri to go more deeply to the institutional wealth management side, our growth engine. Finland is very attractive market. We have seen very good growth in the past, and our view is that the growth will continue. We don't see any signs of this growth being more modest in the future.
At the same time, Mandatum, especially now as a standalone company, listed entity will be very well-positioned in this growing market. We have a very good reputation. I just mentioned one of you that Mandatum's brand value is the 25th highest in Finland by a recent survey, so brand value is very high. We have very high NPS among our customers, and very high market shares in many areas, especially in corporate segment. Institutional wealth management, on the leveraging leading market position, how we will do that? We are already big in institutional wealth as an institutional wealth manager in Finland. We are number one when we think about our expected change in client relationship in next 12 months.
So, I think it's right way to put it is that we will enhance our business in our institutional wealth management and still enhance that. But where we can still grow a lot is our private wealth management, both among high net worth individuals and ultra-high net worth individuals, family offices, and so on. That's the area we are still quite small compared to especially the big banks and some mid-size wealth managers in Finland. So that's really the area we can still grow, and we have a, I think, quite unique system to feed our growth on wealth management side, having in mind that we have a huge connections to those who have money through our corporate business.
Corporate side, it's important part of our business as a feeder to wealth management growth, but it's still, there's a lot of growth areas on that side as well. We can improve its cost-income ratio, we can enhance its business by doing data analytics, and at the same time, there's a certain growth areas like remuneration, personal funds, and so on. So it's not just a feeder base, it's a growing business as well, but not in the same scale than our wealth management side. And then... Sorry, back. Few words about Sweden and Denmark. What we really like to do is that we will repeat our success story, what we have seen among institutions in Finland in wealth management.
We were, like five years ago, really non-existing institutional wealth manager in Finland. I guess the first survey was like we were on the position, like 13 or 14. Now, we are among the top three. We know it's more difficult outside of Finland. We don't have corporates to corporate side to help us, but with, let's say, more like doing by plane and flying to Denmark and flying to Sweden, we have operation in Sweden, 2 people, and now we are putting a lot of resources. We will have 3 people in Sweden office. We still have managed to already gather EUR 1.5 billion assets under management from Denmark and Sweden. Lauri will tell more about this.
So that's something we are putting more resources and efforts in the coming years. And we are, just to remind you, only doing institutional wealth management outside of Finland. So no private persons, it's only institutions, family offices, and so on. So professional buyers. And then the last, maybe not least, is that as I showed you, the Finnish life insurance market is really consolidated already, so four players are dominating the 90% of the market. But of course, opposite of that, the wealth management business area industry is very fragmented. There's a lot of players, mid-size, small-size, big-size players, newcomers.
Having in mind all the legislation changes, so on, I guess in the future, we will see some consolidation in that market. And of course, we are in position to look at all that happening, and may be the part of that. But at the same time, we will to underline that we will not sacrifice our dividend targets and proposal with some M&A issues. So we are really keen on to keep our dividend target as well. So this is something that we only do if it's really create a lot of value for shareholders. So that was my presentation, and there's a time for questions after Lauri's presentation. Then we all will be here to answer to your questions before Jukka's presentation. Thank you.
All right. Good afternoon, everyone here in the room, and as well, everyone online. I'm Lauri Vaittinen, and I'm heading the Institutional and Wealth Management segment. I've been with the company since 2015. And I want to pick two lines from previous presentations. First, Patte mentioned on the capital light side that we have a clear growth path. Then Petri mentioned many times that institutional and wealth management is our growth engine. So what I want to do is to give you more detail description what those lines mean. And I thought I'm gonna split my presentation into three parts. So first, I'm gonna talk on the products and the investment heritage that we have in Mandatum.
The second part is going to be the distribution capabilities, and also the asset management infrastructure, and the platform we have built in the past few years. Lastly, let's go through a bit the financials as well. But first, I want to go through what actually is, of course, the most important part, our clients and what our clients think of us, and also a bit of the history on that side. So let's start with that, our clients. They consist of both, as was mentioned, institutional, professional, and then non-professional clients. Roughly speaking, we have 500 professional clients and 5,000 non-professional private individuals as our clients.
If we start looking backwards, actually, the statistics that Petri already mentioned, what is our market share, and what has been the market share development among Finnish institutional clients? That is the left-hand side graph showed on the slide. So as was mentioned, back in 2015, our market share was just above 10%, and after that, we have grown very steadily, almost every year. And actually, last year, our market share was already over 50%, making us one of the top players in the segment. And when you look this sort of whole timeline, we are by far the fastest growing asset manager in that segment. And of course, what is important is not just where we stand at the moment, what...
But what are the growth opportunities going forward? First of all, when asked from the clients to whom they're gonna allocate most business going forward, in that survey, we were number one. That is, of course, important. But also, even though that we are already quite big in Finnish markets, we see that there is still substantial fee income, revenue potential, even in that segment where we are already very strong. Then if we move into the private private wealth, private individual clients, as was said, we are not yet that big, you could say, in any metrics in that segment. Our AUM is, roughly speaking, EUR 2 billion in Finland, so we operate in that segment only in Finland.
You could think of the market being, let's say, EUR 100 billion, so our market share would be 2%. So there's definitely room to grow, and at the same time, when asked from the clients, they are super happy on us and on our performance. So the internal surveys show that the NPS scores are high compared to sort of the industry levels, but at the same time, external surveys, like Prospera, in last survey, we were number two. So that means that basically, at the moment, not just the existing clients, but also potential clients are thinking sort of very highly on us. So definitely, that is a sort of good starting point for growth going forward. Then if you think of the...
What has been the success factors, both on the institutional private wealth side, we have been growing. So if asked from the clients, it's, you could say two things: They like our products and track record, so the performance... And then as well, the client service and all things around that. So they are happy on how we treat them. So of course, that as well, I think those are the two most essential things that you want to be where you want to be very high quality. Then there are sort of factors also behind the growth that sort of clients may, in some cases, they themselves don't know it, but sort of we know.
One thing I know is the cooperation that we have between the portfolio management and the sales resources, and that actually makes us more professional when we approach clients. Then I know that one success factor in the past has also been timing of our products and the offering towards clientele. So for example, back in the days, 2015, we were early movers on bringing alternative certain alternative investment to our client segments. So for example, our alternative credit products. Actually from that, we can move to the next part, so the products and the investment heritage. So first, I have to say that we are not so-called fund supermarket.
We are focused on fairly narrow things, so our core focus areas are on the credit and alternatives. So, and also on the credit, it's not sort of broad credit, broad fixed income investing, it's the areas that are sort of highly value creating, so alternative credit investing, loan investing, et cetera, et cetera. And the reason for this is the strong investment heritage we have around these areas. So on the credit side, it's very sort of. It's a very straight link to us being an institution investing insurance assets.
So starting from the 1990s, we have started investing into the various alternative asset classes, and especially on the credit side, after the financial crisis, we started doing our own investing into these high-yield high value-add credit type of product areas. And same goes to the alternatives. There's not only link to the insurance group's balance sheet investing, but there's also link our that our portfolio managers have been involved in the very successful Sampo Group's M&A, M&A activity, and also buying, developing, and selling the entities within Sampo Group. So basically, the alternatives, private equity, expertise, and heritage comes from that side.
Even though that we are fairly focused, these sort of products that we offer, the number of the products is fairly small, still, we have wide enough product offering for us to be able to be resilient in different type of market cycles. We can shift from one area to another, which I'm gonna talk later on what has happened in past few years. So we are not dependent just purely on one asset class. And of course, all this expertise, managing large mandates, et cetera, are utilized in broader mandates on a private wealth offering, et cetera. And one thing I have to still mention on this section is that as we are focused, that means that we can excel on the sustainable investing side as well.
We are in the forefront in all the products that we do. We are in the forefront on the sustainable investing as well, and we have invested a lot on that side. Now, if moving to the, as I mentioned, distribution, asset management capabilities, infrastructure. So let's start with the asset management infrastructure. So we have invested a lot on the product offering, widening the product offering, all the entities that we need to distribute the products. We have, for example, UCITS fund management company in Luxembourg, AIF fund management company in Finland, all the reporting, ESG teams, et cetera. So we have invested a lot of OpEx in the past few years for building these capabilities to deliver the products to our clients.
A large part of this is of course recurring, but it's not sort of increasing all the time. So most of the, those investments have already been made, and on top of that, as we've been doing those investments, a lot of those investments have been also one-off. So of course, when, when we build a new product or, or build a new, let's say, hub to Luxembourg, those are one-off costs, at least some part of that. So that, that, that sort of is positive thing going forward, and the things Petri mentioned, for example, on, on, cost income ratio side, going forward. Then is the distribution capabilities. In Finland, we have extensive distribution capabilities.
It's not only the direct distribution we have on the institutional side, for example, but it's also on the private wealth. As Petri mentions, we are getting a lot of synergies of having shared resources on the corporate side. So we have the 10 locations, we are having shared resources, shared offices, et cetera. So we are ahead of the competitors who do not have this link. And on the institutional side, we have been able, with the organic growth, organic investments, to grow the business as you saw in the beginning of my section. And now on top of this, we are growing in Sweden also sort of on the distribution capability side.
Now we have, as was mentioned, three people in the Stockholm office, and we think that we can basically repeat the same growth path that as we had in Finland outside Finland as well, well going forward. So what does this mean when we say that we want to repeat the same growth story that we had in Finland? Well, you got the part of the picture in the graph where we had the market share development in Finland in the past 10 years or so, and that can be seen here as well. Finnish business have been growing with 15% cumulative average growth rate in the past years since 2017. We are already seeing similar growth rates in Sweden, Denmark.
Of course, of course, the percentages are higher, but even absolute terms, EUR 1.5 billion is not the non-meaningful amount in, in our case, asset raised outside Finland. But the sort of details around it is that actually we are doing exactly the same or following the exactly the same process that we follow did in Finland. So we started in Finland with very few products, focusing on the sort of really core expertise areas. And again, it goes back to the high-value-add credit type of product. We started that in Finland. We have started that in Sweden, for example, and we are seeing high growth in that area.
Now, of course, going forward, it's sort of we are happy for the growth at the moment, but going forward, sort of widening the product offering outside Finland is in the plans, but now we are focusing on the credit side. And if you think of on top of this, this sort of addressable market, even though the competition, we know competition in Finland, Denmark, totally different level than here. But at the same time, both of these markets are way bigger than Finnish market and especially combined manyfold. So the potential is big, and we don't need to get as high market shares outside Finland for these businesses to be substantial in our sort of scale.
I said the EUR 1.5 billion already, that is a substantial AUM for us. Okay, then jumping into financials within this segment. So let's start with the AUM growth. Petri already had the Mandatum level growth figures, but in this segment, as was mentioned, 2021, and I want to focus on last few years because sort of I think this being super interesting period in the markets. And it, it's relevant—these are relevant years for that reason. So 2021 was a very positive year for markets. As you can see, the EUR 0.8 billion was market movement in our portfolio. So very positive year for markets, for our products, and fundraising, you could say, was for that reason, fairly easy for industry overall.
So we raised in that market environment EUR 0.4 billion. And actually, at this point, I have to say that most of our products are, when compared to the peers, they are fairly defensive. So the 2021 wasn't sort of, for that reason, maybe the best year for us. But then 2022, which was, you know, it was really difficult year for markets. Yields spiked, Ukraine war, et cetera, on top of that. So the fundraising environment was difficult, but for us it was better than 2021. So shows the resilience of our fundraising and business overall. And then now this year, it's been definitely easier, or at least the market volatility has been lower than in previous years.
In the first six months, we have raised already EUR 0.4 billion, and annualized, of course, that is way higher figure than in previous years. And what is then the reason behind this resilience during this volatile period? One biggest factor is that we have been able to convert the fundraising from our alternative products into credit products. So, for example, in the first half of this year, most of the fundraising actually came from credit products. And at the same time, as we have the alternative products in the background, most of those are most of those are vintage products, where you don't have outflows at the same time....
Then if jumping to what does this mean on fee generation revenue side is, of course, if you raise AUM and you're able to keep your margins steady, that means the fee income will grow. So the AUM growth in the last slide, well, in two and a half years, was roughly 50%. Our fee income growth from 2020, which was EUR 28 million, up until now actually has been 64%, if you annualize the first six months. So 64%. And as can be seen, the fee margins have been really steady, even though that our product mix or asset mix has shifted from alternatives to credit. And one example of that, we have been able to maintain the margin is our flagship product, which this year has raised EUR 150 million. It's a loan product.
If you calculate the margin from the new sales, it's been 1%. So definitely, sort of, we've been able to keep the margins on the new sales as well. And as can be seen when looking back, the alternatives, the growth rates have been extremely high, and actually on the credit, fairly low. But now we are seeing the mix, as I've been saying many times, shifting from alternatives to credit. So to summarize my section, if you look backwards, you can clearly see the good growth rate numbers and what we have achieved. But of course, the more important is going forward. I think our product mix and the capabilities on sort of platform size-side are really good for the growth going forward.
And then that, combined with the fact that large part of the organic sort of investments have already been done in the past. Of course, when growing, that increases your cost base, but at least if you think of the cost income side, we think that sort of there's a good possibility to improve the cost-income ratio for those reasons, as we have been doing a lot of investments in the past or even in the past 10 years. All right, I think that was on my part, and now we have the Q&A with Sami and also the other speakers in the first section.
All right, we're ready for the first question and answers session. If I can ask you to stick to questions about the presentations we've seen so far, for this bit. And also, if I can ask you to ask one question at a time, please. We're gonna start with questions from the room, so if you could raise your hand if you have one, and then we're gonna try and make sure that we have time for online questions as well. Okay, if we start with Jan-Erik here.
Thank you for the presentations. Jan Erik Gjerland from ABG. I just have a couple of questions, but I'll stick with one, as I said. If we could start with the competition in the unit-linked business, you have a fantastic 48% share. So, how is it possible to get there, and, or how could you sort of stick there without any competition? It seems to be... So, is it possible to maintain that or even grow it? And secondly, then on the same kind of market share side, on the risk life, how is sort of that linked towards the unit-linked product as such, or is it sold on its own? And if you can answer that as well. Thank you.
Yeah. That's a question for me. Thank you very much. Very good questions. So I think it's if you're holding almost 50% market share in unit-linked group pension, it's quite difficult to grow it anymore. I think it's a tricky thing to just keep it that way. But the reasoning why we have so high market share, there are many reasons for that. I guess the one reason is that we have by far largest offering to our customer. We are not just selling to our customers a product, so it's not just selling the group pension plan. It's selling the remuneration variable compensation system. We have consultants to do that. So mid-size, not listed company, doesn't many times have any variable compensation system.
So we build up that first, then we sell the unit-linked, group pension plan afterwards. So that's something that others are not doing. They just try to sell the product. We are selling the service. And, we have 50 people just doing that, and of course, not just doing that, it's selling the remuneration, personal funds, unit-linked policies, risk life, which I will come back, and, and the whole package, and no other companies, they don't have that kind of sales forces. Why we have and why we can afford that, is that they are selling so many things, and also feeding the institutional wealth management, with the hints to the wealth management. So, that kind of sales force, it doesn't exist in any other company. So that's the one reason.
So if you want to build up the system, the pension system in Finland, we are the one they first refer and call really. We have expertise for that. And, the second one, the risk life, you are right, it's standalone product in certain way. There's no link to unit-linked , but it's a huge link to the whole offering. So it's not. We don't want to leave that door open to someone to go, to come between us and customers. So we, we have to do that, and it's a standalone, it's a profitable product. But let's see if someone is driving around in Finland just selling that product, it might not be profitable. But if you're selling that with, among others, it's, it, it's good add on that. So we want to, take care of the whole relationship. That's the thing.
Thank you.
Sauli?
Thank you, Sauli Vilen from Inderes. I guess this is for Lauri. About your product offering. You're in asset management side. You're still operating with fairly narrow focus, you could say, range. Are you happy with the current offering range, and how would you like to see that being developed over the years?
Very good question. At the moment, we are very happy on the product offering for current market circumstances. But of course, as we have been in the past, we are flexible on introducing new product areas, even new teams, et cetera, going forward if the market situation changes. I think the platform we have, one good example that we are ranked number one among finance students in Finnish universities. So we have very good platform to build capabilities in other areas as well. But of course, we want to stick the areas we know best, and sort of the areas we would expand are probably first gonna be close to the areas we know best and expanding within those areas.
And then, still to you, about the fee-based income, how big of a share are the one-time fees there, for example, maybe like carry income or et cetera?
Yeah. I'm not sure was it in the full note, but the figures I showed didn't include performance fees or carry or any one-time-related fees.
Oh, yeah. Then, finally, about the Danske cooperation. Petri, I think you mentioned that you hope that it will get better. Is there some concrete steps what you can actually take to make it run better?
Yeah, thank you very much. Very good question. It's after having very long journey with Danske. We have tried many things, but I think it's also the new management in Danske at this point. And so, the cooperation and the level we are now discussing how we will support together our businesses is in really good level now. So in that way, I'm more optimistic than some other times behind us. There've been many different eras, times, but at this point, the existing management is really willing to support our common business. So that makes me feel more confident that we can really enhance the business together with them.
Mm-hmm.
Antti Saari from OP Group. I have one, like a sort of a high-level question. You have two very different kind of stories here. Of course, the, the capital-light business, without a doubt, there is good growth opportunities, but then you have very profitable, with-profit business in, in rundown. So putting all, all together, do you believe that, that your earnings will be higher in five years than they are today, without, without any, acquisitions or so?
Yeah. So I can answer to that. Thank you very much. Yeah, we of course understand if you look at one thing going down and producing a lot of profit at this point, and one thing is growing, but it's fee-based business, you need a lot of assets under management. After five years, it's really difficult to forecast, but in budgeting, we of course try to be in a position that our absolute result is bigger than today, even though we know that a part of our business is going down, and it can't create that much profit anymore in the future.
Uh, maybe-
Yes
... I comment then on the acquisition side. We haven't calculated with any acquisition, so that has to be value creative and opportunistic. And as you know, we have had many opportunities into asset management. We have seen everything in Sampo during my career in over 20 years, and I know how difficult it is to find a good asset manager at the right price. So we will be very defensive on that side.
Okay, thanks.
Jaakko, next.
Actually, Jaakko, if you hold on for a second, we'll take one question for online, and then we'll take yours. Just to follow up on, because we've had a bunch of questions on inorganic growth, for example, from Tryfonas Spyrou from Berenberg. What's your appetite in terms of expanding through inorganic growth or M&A abroad, outside of Finland?
... for the moment, absolutely not, no appetite. Of course, we are just starting our journey here in Finland, and if we are going to look, it probably will be in Finland. But as I said, we have to be really picky, because, when you look historically on asset management deals, it's not easy, as the goodwill can walk out of the door every morning. So you have to be really certain to do anything, and it has to be first Finland. Hard to imagine that we would look outside of Finland.
Good. Thank you. Right, let's go to Jaakko.
Hi, Jaakko Tyrväinen from SEB. I could continue on the M&A side of things. What factors or features you are looking at or eyeing when you are analyzing or considering potential M&A candidates?
It's really easy. As I said, it has to increase the shareholder value, and that's the way we have always done it in Sampo also. We are not empire builders, and it has to be a building block to our existing business, that we are really sure that we are creating value. It's as simple as that. We are not taking 10 candidates and we want to buy something. It has to fall naturally a piece to us.
And if I may add, it's very important. Its cultural fit is very important in our businesses. So it should be very cultural fit if we do something. And of course, you can buy distribution, you can buy teams, and so on. So different factors, of course, but it's... We are very picky with that.
On your product offering going forward and your efforts in new sales, alternatives obviously saw a very strong demand in the era of zero real interest rates. How has the appetite for alternative products developed now that the rates are again on a high level?
Yeah, high level on the, like, market level is, is for sure that the appetite is decreasing and, and even heavily in some areas, and you can see it on public figures, on, on private equity, et cetera. But as, as said, we have been focusing on, first of all, high cash flow generative strategies. That is a positive thing in this, this type of environment, and, and also in some sense, more defensive, not leverage-driven strategies that much. So that is, again, in this interest rate environment and maybe economic environment, positive thing.
Okay, thanks.
Hans?
Hans Rettedal in Danske Bank. I was just wondering, you mentioned the institutions and wealth management, the growth has... or it's been a growth driver. And then you also say 70% of your corporate customers are customers in this. How much of the growth has come from sort of the cross-selling of those? And if you're at 70% already, how much can you sort of continue to cross-sell between those two segments?
Yeah, it, I think the very clear answer to that, because on the institutional side, it's not that much cross-selling. The cross-sell is, cross-selling is on private side, and there, the market share is really low. So I think there's a tremendous opportunities and growth prospects on that side going forward. Someone has those 98% of the market, and large part of that wealth has some kind of corporate connection. So there's definitely a sort of cross-selling opportunities going forward as well.
And then I was just wondering, on your fee income, you've managed to sort of hold it up quite well. And you mentioned that you've been—your new sales have been mainly in the credit. And from a risk perspective then, can you just explain the product mix in credit if you've managed to keep the fee income unchanged after sort of having grown very strongly in alternatives over many years?
Yeah, for us, you could say that the lowest margin products are on the credit high-yield bond type of strategies. Then the medium-margin products are on the loans, leveraged loan strategies that we manage in-house. So it's a sort of high value added that we do in-house, and the margins are higher than on high-yield bond strategies. And then we have the alternative strategies, where we have also opportunistic parts which should be good in volatile periods in market, even though the overall market demand goes down in alternatives. So all these basically areas, we see that the margins are high, maybe not on the high-yield bond side.
They are sort of not super high, but still combined, as said, they are on that level that it’s not difficult to maintain the existing margins that we have.
Thank you.
All right. I think we're running out of time for this first Q&A session. There will be another one later on, where we will get back to some of the questions we missed, particularly the online ones. But let's reconvene again 4:20 P.M. and restart the presentations then. Thank you. All right. Our next presenter is the CFO of Mandatum, Jukka Kurki. Please go ahead, Jukka.
Thank you, Sami. Okay, so next we continue with with-profit portfolio. This portfolio is in run-off status and but still having an important role when it comes to our profit generation and also capital returns. Today, our main focus when it comes to this segment is in capital management, asset liability management, and also seeking spread from assets over cost of liabilities within risk limits. My name is Jukka Kurki. I'm CFO, been in that position since 2009, and before that I was chief actuary. So first short overview. Majority of these policies were sold in 1980s and 1990s, and we started to focus on unit-linked segment in 2001, and since that, this portfolio has been more or less in run-off status.
AUM is EUR 4.3 billion, including also sale to equity, and liability is EUR 2.4 billion, and majority of that liabilities come from with-profit pension policies, meaning that those cannot be surrendered or transferred, so those are sticky and also well predictable. Well-predictable liabilities, and so we have very good view on the expected liability profile. We have two separate portfolios, both having different liability features, different profit-sharing rules, different risk appetite, and also different investment policy. And when it comes to Finnish profit-sharing rule, that is quite different compared to many other countries.
Here we have more flexibility in that, but on the other hand, when it comes to flexibility change in any other policy terms and conditions, there we don't have, to be honest, more or less any other flexibility to change those policy terms and conditions. First six months, annualized investment return was around 6%, and that exceed clearly cost of liabilities, so investment result during the first six months was EUR 57 million. And when it comes to current fixed income, mark-to-market yield, that is 5.9%, and today we are discounting our liabilities with market-consistent curve, and that curve is roughly 3.5%. So 5.9% mark-to-market yield and 3.5%, discount rate, roughly.
Around 10 years ago, we estimated that our liabilities will decrease by EUR 2 billion in 10-year period. Those decreased by EUR 2.1 billion in eight-year period, and reason for that faster decrease is that we have made tens of different management actions to speed up that trend. We expect that trend to continue and liabilities to decrease by around 50% until end of Solvency II transitional period. Today, liabilities are discounted with market-consistent yield curve, meaning that there will be annual volatility between those, but anyway, trend is very clear. We are long-term investor with long-term investment strategy. That is very natural if you think about our liabilities, which are also long-term and sticky.
Our long-term average investment return has been 5.6%, which has exceeded also clearly our cost of liabilities during those years. Today, our assets are much less risky and also less volatile, but still return expectation is in the same level or even higher as interest rate has increased. And when interest rate started to increase last year, that gave us an excellent opportunity to start de-risking and without losing asset return expectation. And also as an independent company, our risk appetite is different than it used to be. And so due to these two things, our current target allocation is also quite different and less risky than it used to be. And when it comes to this de-risking, main change can be seen in listed equity allocation.
That used to be around 30%, a couple of years ago. At the end of last year, it was 20%, and today it is below 10%. But this de-risking is also ongoing inside fixed-income assets. High-yield exposure has decreased as new investments are made only to the investment-grade assets. And we also set up liability hedging plan, and today, roughly 55% of the liability risk is covered with fixed-income assets and swaps. This de-risking has, of course, had material impact on our capital requirement. First of all, good to notice that this pre-profit market risk capital requirement, that is by far the biggest element in our capital requirement. 18 months ago, that capital requirement was EUR 1.2 billion, and now it has decreased close to 50%.
Main change can be seen in equity side, which has decreased by around 60%, and today, majority of our equity risk comes from the private equity assets and private credit assets. Spread risk has also decreased as high-yield exposure has decreased. And interest rate risk has decreased by 40%, and that is due to swaps we have made. This all has also material impact on the own fund sensitivities on the right-hand side, as you can see. We will continue this de-risking, but more like with baby steps compared to last 18 months actions we have made. Okay, that was about the profit segment and profit business.
Next, we continue with the financial performance, and first we will take a look on the key profit drivers, key result drivers, focusing on the fee result, and then deep diving into organic capital generation, and finally, a few slides related to solvency position and also capitalization. Our earnings logic is actually quite simple. We have three different result components. First one is fee result, that is related to client assets. Main component or main profit drivers being AUM, fee margin, and costing ratio. That is already very important part of our result. That is, in a way, also the most valuable part of our result, and that is also a focus area where we are seeking growth in the future.
Second part or second element of the result is investment result that is related to with-profit assets and liabilities, and that result is simply fair value asset return minus cost of liabilities. And today, cost of liabilities, because we are now discounting liabilities with market-consistent yield curve, this cost of liabilities is much more transparent and intuitive as it used to be. And we will also, of course, disclose to you lots of information quarterly on related assets and liabilities, and also liability sensitivity, so you will get good view on the components behind that one. And when it comes to expectation related to investment result, those long-term expectations are in line with the expected liability movement. Third one is risk result.
That is very modest when it comes to first six months result, and okay, this arrow shows that we are not expecting any growth in that area. That's true that we are not as such when it comes to the business, or we are not expecting any material growth, but we are definitely not happy with that kind of result. So this line doesn't mean that, okay, result expectation is something like that. Okay, this risk result, that is related to our risk policies, meaning death covers, disability covers, and critical illness, and so on. Main component in that is CSM and CSM release. At the end of June, that CSM was EUR 130 million, and we expect around 10% of that to be annually released through profit and loss.
Then let's take deeper look on the fee result. AUM is the basis for fee result, and net flow is the main component behind AUM growth. Investment market, as Lauri already mentioned, investment market has been quite volatile between those years, but we have still had good net flow for all those years. And this first six months, net flow that has been outstanding, mostly thanks to the institutional and wealth management segment. We have disclosed 5% net flow target, and as can be seen, corporate segment is well in line with that target, and also good to remember that this corporate money is totally pension money, meaning that that is sticky and long-term money also. Retail segment, that is mostly Danske cooperation, that has been slightly negative.
As Petri mentioned, we have positive expectation on that, too, but it doesn't change the big picture that our net flow target and growth target, those relies on the institutional and wealth management segment. Another key driver when it comes to fee result is fee margin. Petri already showed that our fee margin has been stable, 1.2%, during recent years, and so also fee income has developed in line with the AUM. And as already shown in previous presentations, that the fee margin growth also comes mainly from the group institutional and wealth management segment. We strive for disciplined pricing and margin, but of course, total fee income may change as the business mix is also changing.
This may look a bit technical, but let me explain this one. Inside this 1.2% total fee income, we have two different kind of fees, which are treated differently in profit and loss. First one is so-called pension fee that we get from the unit-linked pension policies, and this fee and related expenses are already recognized in CSM or shareholder equity. The CSM, contractual service margin, that is present value of expected future result based on our best estimate cash flows. At the end of June, that CSM related to these policies, that was EUR 270 million, and we expect 9% of that to be annually released through profit and loss. Then this another component that is related to investment and asset management services.
Notice, notice that we get this fee from all client assets, also those assets which are backing unit-linked pension policies. That fee margin is 70 basis points, and approximation for that result component is AUM EUR 11.2 billion times 70 basis points fee margin times 1 minus 75% cost income ratio. I'll come back to this cost income ratio and expenses actually in next slide. So expenses have increased during recent years, but that has been our conscious decision. We have been focusing on growth and also and due to that, we have invested, as Lauri mentioned, we have invested very much into this capital area when building platform. So today, we see that majority of our critical investments are made. So...
and still our main focus is seeking growth, but we are in a position that we also will start to pay attention to our cost control and so on. So, when it comes to cost income ratios, which are on the right-hand side, 66%-67%, that is total cost income ratio related to this client assets. We see that because majority of investments are made, we are now expecting to see also some kind of scalability benefits, and so we are also targeting to decreasing cost income ratios. And, notice that this 67% cost income ratio, that is related to total client assets, fees, and expenses, including also those pension fees and expenses.
When it comes to the previous page, fee result related to investment and asset management services, then we should use this 75% cost income ratio, which is also presented here. As a summary for this capital light section, we have set three different targets, which are very crucial for this capital light area, and all these are targeting growth, both AUM growth and also both fee result growth. All client segments are totally focusing on capital light area and also committed into these targets. Majority of AUM growth, that is expected from the institutional and wealth management, wealth management segment, and that first six months, that was excellent, excellent. As mentioned also already, we also strive for disciplined fee margin, and meaning that we are not sacrificing our profitability when seeking growth.
We also believe to see scalability benefits and also targeting decreasing cost income ratios. So that was about profit drivers, and next, we move to capital generation. Our solvency position and solvency ratio was already very strong at the end of last year. Solvency ratio 266%. That has improved further during this year, and now it's close to 300%. Main drivers behind that is the management actions, as can be seen here. First one is that we have paid, or actually, we have not yet paid, but we will pay in September, EUR 100 million RT1 loan back to Sampo, and that is already deducted from our own funds at the end of June.
We got approval from Finnish FSA earlier this week, so this will be paid in September. But the main impact of these management actions is the EUR 135 million decrease in capital requirements, and that is due to de-risking. So all in all, this both has a very positive impact on our capital solvency position. Then we have this other line. There we have two one-off items, which explain that, and that decreased our solvency ratio by 25 percentage points. So we end up close to 300%.
We have also presented here pro forma solvency figures, and that pro forma means after those acquisitions that we are planning, acquiring Saxo and Enento, and those small investments, smaller investments from Sampo. Those will increase our market risk totally by around close to EUR 200 million, and that will increase our capital requirement. And also as part of the separation, part of Sampo's loan will be transferred to Mandatum, and that will decrease our own funds by 84, 85, 90 million EUR. These are not exact figures yet. Those exact figures will be finalized quite soon. So all in all, that has that decrease or not decrease, but pro forma solvency ratio after these adjustments is 232%, still very strong.
But pro forma, solvency ratio and others are not the main topic or main point in this slide. Main point is the organic capital generation. So own funds generation, EUR 51 million and SCR reduction, EUR 44 million. So let's come back to those. So first of all, organic capital generation, during this year, EUR 140 million and close to EUR 400 million, during last 18 months. So even in a year like 2022, we were able to deliver material, organic capital generation, and this all has also more than covered our dividends that we have paid.
When it comes to this EUR 140 million, EUR 51 million of that comes from the own funds generation, meaning that how much we have been able to generate new own funds from through our business. Around EUR 40 million, that comes from the investment result and EUR 10 million from the new business. New business has created around EUR 10 million new own funds. Capital requirement has decreased by EUR 44 million due to business evolution. By this business evolution, we mean that profit liabilities are decreasing, and that decrease capital reduction. But also, when it comes to capital criteria, new business requires less capital than the old book, so that is also releasing capital. So all in all, capital SCR reduction was EUR 44 million during first six-month period.
If assuming 200% solvency ratio, that releases capital totally EUR 88 million, so we end up to EUR 140 million. EUR 28 million of that comes from the capital light area and rest from the profit area. I will go through more closely this with profit area, organic capital generation, next slide. But before that, few key takeaways from this slide. First one is that so far, organic capital generation has more than covered our dividends. Next one is that capital will be released due to the business evolution. And third one is that fixed income assets mark-to-market yield exceed liability discount rate, so we have also positive expectation when it comes to own funds generation. Then back to the organic capital generation and now focusing on with profit side.
40 million euros own fund generation, that comes more or less totally from the investment result. By the way, notice that these figures are after tax, after-tax figures. SCR reduction due to business evolution, 35 million euros, and again, if assuming 200% solvency ratio, that releases capital by EUR 70 million, so we end up to EUR 112 million organic capital generation during that period. Also good to notice that our current solvency ratio is much higher than 200%. So in real world, more capital has released than that one, but we have used this 200%, which is our upper level of our target zone. And another thing which is good to note is if, you know, forecasting this, this SCR reduction during first six months, EUR 35 million.
Today, our capital requirement related to with-profit portfolio is around 30% more or smaller than it used to be. So also, going forward, this SCR reduction related to business evolution will be a bit lower than that one. Then, few slides related to solvency. Our solvency position has been very resilient for different market movements. There has been COVID, there has been Ukraine war, there has been negative market rates, there have been negative market, positive market, whatever. Our solvency ratio has been stable or even improving. And if you look at the own funds, maybe a better so here, but own funds at the end of 2015 and compared to own funds today, that has increased by EUR 450 million.
Okay, we issued a subordinated loan in 2019, EUR 250 million. So if we deduct that, then own funds has increased during that period, EUR 200 million. But in addition to that, we have paid EUR 1.5 billion capital flow to Sampo, when taking into account all dividends, group contribution, and also that EUR 100 million RT1 loan that is already deducted from the own funds. So also good to notice that our own funds quality is excellent, majority being tier one capital. And during last few years, solvency ratio has improved significantly, and that is due to de-risking, which has decreased our capital requirement.
Key takeaways from this slide, very strong and resilient solvency position, and also EUR 1.7 billion capital flow and own funds generation since 2015. Few words about capital management. As mentioned, just mentioned in previous slide, very strong solvency position and also resilient, and also trend is on our side as liabilities are decreasing and releasing capital. And we expect growth from fee result, and also current mark-to-market yield gives good basis for investment result too. This, together with business evolution, supports our EUR 500 million cumulative dividend target. Since 2020, we have paid EUR 500 million dividends to Sampo and around EUR 50 million group contribution. Solvency ratio target zone 170%-200%.
Today, pro forma solvency ratio, 232%. We are not in a hurry putting that inside our target zone. And then, finally, our financial targets. In a way, all we have presented here today are summarized into these targets. These targets on the left are crucial for the capital light area, and all client segments are totally focusing on that area and also focusing on these targets. With-profit portfolio is in run-off status, and so liabilities will decrease, and that will also release capital in the longer term. Solvency ratio target zone already mentioned. And then we have, last but not definitely least, our cumulative dividend target, EUR 500 million for next three years period. I see that we have all pieces in a very good order to achieve that target.
First one, fee result is in a good path, and also capital will be released due to business evolution. And third one, fixed income assets investment result, investment fixed income mark-to-market yield is exceeding clearly, discount rate of liabilities. So all in all, we are very, very confident with this cumulative dividend target we have set. That was all from my side. So but, closing remarks before we give it there.
Yes. All right. I hope that we have presented today that you find that Mandatum is a interesting investment opportunity, and I will want to be very brief. So I am just repeating the three takeaways that we have tried to present today... proven foundation. We know what we are doing. We have a proven track record. We have a clear growth path, and as Jukka presented many times, that we know that we have a strong balance sheet, and we will return capital to our shareholders. So thank you all for participating on my behalf on the first Mandatum Investor event, and then we move over to the Q&A part. Sami, please, you come and moderate.
All right. Let's go to the second Q&A session. Then, once again, please try and ask one question at a time. I'm gonna start with a question actually from online this time. We've got a question from an investor about capital returns, where they point out that you have quite significant, about EUR 2 billion of own funds, as well as that you're gonna carry over some private equity assets into the new structure, about EUR 400 million. So do you see opportunity to optimize the balance sheet over time? And do you think that it's possible to, or, or is there potential upside to this EUR 500 million dividend target that you've given?
Yes. As we mentioned in our presentation, so definitely we want to be conservative in the beginning. This is the beginning of our journey as a listed company, but of course, we will optimize going forward, and we have a clear midterm target that we will go between 170-200. But of course, we want to execute faster, but not to overpromise anything, so.
Also when it comes to, when it comes to optimizing our assets, I see that because liabilities are sticky and long-term, I see that those alternative assets actually fit quite well to our liabilities.
Okay, great. Let's take a couple of questions from the room then. Who wants to go first? Jan Erik?
Yes, thank you. From Jan Erik Jarlon from ABG once again. On the asset mix, you said that you have changed the asset mix quite dramatically from 2021 to 2022 and into first half of this year. How is that driving your sort of normalized return? You had a very good graph, 5.6% over the last 20 years or something, which is impressive. So how should we read that into your normalized expectations for returns in that with profit book? Is it above on that level or even below that level?
Okay, if I take that one, as I've been looking after that portfolio for quite a long time. So as Jukka said, our running yield is mark-to-market yield is 5% now for now. And when we are investing now, we used to have a really high equity weight, and now we are rolling in that into the investment grade. And if you look where the investment grade is the yields what we are investing in, so we are investing in the same part between 5%-6% today. So you would expect us, and then we still have the private equity and the private debt on top of that, so the return expectation probably between 6%-7%. But this is just a guesstimate. As we all know, it's not easy to predict future in investments.
Of course, this was just to normalize the expectations from the returns.
Yes.
Secondly, you're also a little bit into it on the Saxo and NN2. You said that it could probably fit into your pension business, if I understood you correctly, the Saxo Bank or-
Sorry, I mean those private equity assets that we have now backing our big profit liabilities.
Okay, exactly. So, what's your long-term plan with Saxo and Enento?
If I take short background around Saxo and NN2 and the other investments, they are made by the Sampo investment team. That actually came to Mandatum Asset Management one and a half years ago already. So actually, it's natural that those assets come over to Mandatum side, but we will manage them for value, and we will sell them. And as you probably know, I'm in the board of Saxo and NN2, and I just have one goal, to sell them at as good price as possible and as fast as possible. But, you know, market conditions are maybe not, not the best for now.
Okay, and finally, then income from those assets, when they are at your books, would that be purely dividends, or will it be an associated income to that, to that note?
Majority dividends.
Majority. Thank you.
Yeah.
All right. Any other questions in the room? No. Should we, should we take... There's a couple of leftover from the last session, so if you go back to, a couple of those, maybe. One related to the international expansion and... Yeah, maybe it's good if we get you guys, up on the stage for this as well. One related to the international expansion and your plans there, and what, what do you see as your competitive advantage in, in this area? What is it that's gonna win you clients? I guess there's lots of other players trying to vie for this business as well.
Yeah, it comes to our sort of core focus and basically, competitiveness around those core products. So we have, from the investment heritage, we have very long experience on alternative credit, loan investing, private debt, and certain other alternative strategies. So it's definitely around those. But as I mentioned in the growth story-
... outside Finland, we are now focusing on very limited amount of products. So the focus equals power type of thinking in those.
Good. And then we've had a couple of questions on the cost ratio and cost ratio development. One is, you've given an indication that you want costs to go down, but is it possible to be a little bit more specific about what you see there, and how do you see that developing by segment?
Well, we have not disclosed any more target than this improving cost income ratio. But as I said, we are targeting improving cost income ratio, but not giving any exact targets for the moment.
In terms of investment needs, what do you, what do you foresee? You mentioned that you've done a lot of investments already, but do you see a significant need for further investment to support the growth?
Well, Lauri already mentioned that we have done quite much investments, and we see that we don't need any major new investments to meet those net flow targets that we are now targeting.
Okay, great. Then, one question on interest rate sensitivity. Basically saying that, and it's from Alex McKenzie, from Exane. Basically saying that a lot of the EU life insurers have seen a large benefit from higher interest rates over the last couple of years. What is your sensitivity to a downward move in interest rates, and how should we think about this in, I guess, in the context of your Solvency target range of 170%-200%?
Well, yeah, that sensitivity, we have actually presented that in our H1-1 presentations. But if we assume 100% parallel yield shift down, that will cause roughly to our original portfolio roughly EUR 150 million increase in liabilities. But at the same time, when it comes to fixed income assets and swaps, those will cover around 55% of that decrease.
Half of roughly 150-
Yeah.
would be the target.
Yeah.
100 basis points.
Yeah, parallels.
Something.
Okay. That, that's what I mean.
100%.
Oh, yeah. Yeah.
There's been a couple of questions around the debt in Mandatum as well, and obviously, can't comment on any specific issuances here. But what do you see in terms of your debt stack and the development of that going forward, and your financial leverage ratio?
Well, pro forma leverage ratio, when taking into account the Saxo deal and the vendor note that we are getting, that pro forma leverage ratio is roughly 25%. But we are also planning to pay back that vendor note in at least four years period, hopefully sooner. So, our leverage ratio will go down, even though I don't see any problems with this 25% leverage ratio either, but anyway, our expectation is that that will decrease.
Maybe I would comment also on that going forward, of course, we will look at capital optimization with RT1 and Tier 2 also, and we will keep our rating and all options open going forward.
Our rating is single A.
Yes. Standalone.
Perfect. Then if we go back to an operational question, and which refers to slide 12, and this is from Michele Ballatore, from KBW, where we show the market shares that you have relative to competition, and that your market share had increased by about 11 percentage points in the last five years or so. Could you explain the dynamic behind this and why how you've been able to outperform the competitors so, so well on, on market share?
Yeah, I think there's a... Of course, there's no one explanation for that kind of change. I think the main thing is, what I try to explain here, is that we have, especially during five last years, we have managed to increase really the way we operate in corporate customers and so the feeding to our wealth management business through the corporate connections. That's one thing. Institutional customers, institutional wealth management customers, as you saw, Lauri show you the picture of how we have managed to increase our market share on that side. And the third one is outside of Finland.
If you look at the figures, when we have grown, it's quite a short period of time in Sweden and Denmark. So that's the third one. So all this is coming to our figures here. So it's mostly include that number. And of course, why we have managed to do that, it's not just the sale competencies, it's also the great performance in our instruments.
Any questions from the room? We take Hans.
... Hans Rettedal, Danske Bank. You had a useful slide on the fee margin, where you split it up into the pension service fees and the investment and asset management fees. I was just wondering, of the 1.2%, and then you're splitting it into 0.5% and 0.7%, how have those two components developed over the same period, where sort of your total fee margin has stayed unchanged?
We have not calculated it that way, because now I'm saying the word which is, was not pre-allowed, IFRS 17. So those are related to accounting standard, and, and that's why we don't have those, that kind of historical figures.
But do you get any, under IFRS 17, do you get any benefit on the fee margin from the increase in pension service fees due to the CSM?
Yeah, that definitely, but that will be, you know, going into CSM first and then release over the years to capital. As a matter of fact, both elements, they, there is actually exactly the same profit drivers or growth drivers. There is AUM, fee margin, and costing ratio. It's only about timing when that result is recognized.
We thank you, Jaakko.
Jaakko from SEB. One more on the with-profit business and the run-off there, because now that the customers or the policyholders can actually earn higher yields outside the their pensions in the with-profit book. Do you see that the run-off—that you could actually accelerate the run-off going forward, and would you do so?
So, good question, and that is definitely a totally new option for us, to be honest. We have been doing tens of different actions to push down those liabilities, but so far, we haven't been able to, you know, offer low-risk investment objects for clients. So, that is definitely interesting option for us, and we will definitely take a look on that. And that's right that, but when it comes to those cash flow projections and those liability projections, notice that we haven't taken any that kind of actions into account.
That's true. If I may add that, in the past, we have never used as a reason to convert your existing with-profit policy to something else like unit-linked , that you might get something which is bigger than your existing policy, benefits and guarantee, guaranteed rates. So because... But now it's totally different situation, as we all know, so it might be an option.
Good. Thanks.
Jan Erik .
Thank you. Just a couple of detailed questions on the with-profit book, and probably around the how we should think about the guarantee versus your sort of discretionary bonus or whatever you call that, about the guarantee levels and when it's actually been taken out. And if the segregated portfolio has the original portfolio, as you say, has one book, so to speak. So it means that you have one book to share everything into, and then if you have return above 4.5%, you get sort of whatever is above that, and if you have above 3.5%, you get whatever is above that, and 2.5%, etc. So how should we read your previous discounting down to zero for some couple of years versus the future cash flow?
Or is everything now discounted back in this IFRS 17 level, so it doesn't matter anymore about how much you discounted it before? So just run that a little bit more detail. That will be good for me, at least.
Yeah, that's true. That situation has now changed quite much when you have IFRS 17 and... but only, only in that way that now it's more transparent and more intuitive. And so when it comes to those—sorry, I'm going into details. When we are projecting those cash flows, we are assuming that interest rates will behave like, you know, current forward rate proposes. So if, and based on that, that kind of profile, we have also included our best estimate bonuses into those cash flows. And when it comes to these EUR 2.4 billion total liabilities, there is already around two hundred million euros bonuses inside, expected future bonuses inside that.
Okay, majority is related to segregated portfolio, but also when it comes to those original portfolios, 0.0 guaranteed liabilities and 1.5% guaranteed liabilities, there is also bonuses. Expected bonuses are already included in those. So does that answer to your questions?
And then you can take out whatever is above that level, is that what you say?... So this returning about that liability sort of cash flow, you, you can take down that-
Yeah, it's that. That's more or less so if interest rates do not change.
Yes.
Yeah.
So, if it, let's say, stay at this 4% or something, so it will means that you can then, given that cash flow and you're discounting your liabilities, you can then take out whatever you return about that kind of liability cash flow when it comes to the asset side?
More or less so, yes.
Thank you.
Sticking to the with-profits liabilities, there's a question from Johan Ström, from Carnegie about what's a good assumption for a sort of rate of decline in the with-profits book? I mean, I guess you gave some longer term numbers, but is there anything more you can say about the shape of that rate of decline?
To be honest, I don't have much more to say about than that profile that we have presented.
Okay. Fair enough. And then on the moving back to the business, the operational business again, we have a question about the retail business and your retail touch points. Do you have an ambition to add incremental sort of distribution into the retail segment? Is that something you'd be interested in?
Yeah, it's as we have stated, the Danske cooperation is our main path to the retail business area. Even though we have a exclusivity to Danske's distribution, and we don't have any hindrance to do something else with someone else. If we think about the solutions in Finnish market, which are, let's say, big enough for us to make really any change, there are not really good names on the table or any other distributions and else to think about. Of course, we are all the time thinking, are there any ways to enhance our business in retail? But it's... this is... Banking is really consolidated. All the banks, they have their own life insurance companies. Danske have, they have, they, they have us, and so on.
So there are no obvious candidates to partner with, really.
Sticking to the business and I guess cooperations, how much of your assets under managements relate to Sampo or If, and what, what can you—what would be reasonable to expect in terms of what might happen with those, those assets?
Should I answer?
Yeah.
In the figures that we have presented today, there is not, they are not included. So we have presented just client assets of EUR 11.2-
11.2.
-point two, and then we have the with-profits of EUR 4.3. Then we have this discretionary mandate, some EUR 4 billion, but the fee income from that, it's minimal and-
Those are also excluded from the fee, from the fee figures, and you can see in the presentation footnotes, the so-called large mandates, which includes those figures.
Perfect. Then, a question again from Johan Ström, from Carnegie. There's a strong trend for, for clients to, to want access to index funds and, and I guess more sort of funds, more commoditized funds at lower margins. Is that something that you would add to your own range of products, or are you very fairly happy to stick with the, I guess, narrow, credit and, and alternative fund range that you have at the moment?
It's not that we wouldn't be investing at the moment to actually to index products. Within the discretionary mandates, the areas that we think that we don't have competitive advantage or we can sort of beat the market, we are using passive products. So when our clients, especially on the private side, when they are buying broader mandates, they are included. But as such, distributing those products wouldn't make sense to us, as it's a sort of low-margin business, and using this sort of channel to distribute those, that go. We don't see that happening going forward.
Moving back to the with-profits book, and you mentioned before that you're taking some actions to accelerate the run-off there. Does that also add to the growth in unit-linked AUM? Can you shift from one pool to the other? Basically, this is a question from Freya Kong from Bank of America.
Well, actually, we... In a way, that's, that's already that question that, yes, there is, there is definitely something that we have been doing, and, and we will continue that. But that is when it comes to those liability profiles and so on, that is not included. These kind of actions are not included into, into our forecast.
Antti?
Hi, Antti Saari from OP again. What is actually included in these large mandates?
We haven't disclosed it, but it's mainly Sampo and Sampo daughter companies.
Oh, we have said in the materials that one of the clients is Kaleva Mutual Pension Insurance Company.
... and that's included in those figures. But as said, the margins from that business are very low, and that's one of the reasons that they are not included in the overall figures and the margins.
Okay, I see. And is it sort of sticky money? Do you have, like, long-term contracts, or how should we expect that money to stay there?
But, it's not returning anything to us. It's just a pool of money. So we are not asset gatherer in that sense. If we are gathering assets, we want fees. So now I can't talk about what Sampo is planning. Ville Talasmäki, who used to work with us, so he will go over to Sampo, and it will be Ville's job to then to decide what he will do.
And I can say one thing on those, that in the past, it's been a relevant pool of assets when we've been building up the client side of business. But nowadays, actually, the client side of business is relevant size, so that's not crucial of running the portfolio management and the businesses. And as said, it's not generating fee revenue. But in the past, it's one of the sort of leverages that we've had when we built the operations.
That's clear. Thanks.
And just to add to that, the team has already moved over to Mandatum one and a half years ago, and Ville is the only guy who moves back to Sampo. But then it's, of course, up to Ville and Sampo what they are doing.
Jan-Erik?
Thank you. Just following up on that note on the If side, I don't know if it was this you recall, but in the prospectus, it was said something about an If agreement, a distribution agreement. I don't know if that was the risk products sold there or something, but it seems like that was sort of about to be changed very soon or moving out or anything. It was some kind of risk areas there. So could you just shed some light, what is If doing for you? Are they selling something, are they distributor, or is it just these asset management products that you do for them? Thank you.
Yeah, if I may, I answer. So, yeah, what we have done with If, we have had cooperation in the commercial side, which is over the years, it has been down. It's very, very small at this point, so it's not really affecting our corporate side numbers. What we have done in private side is that we have, If is selling its package personal line in Finland, and we have provided the pure death cover to them because they couldn't underwrite that, because in Finland, you have to be life insurance licensed in order to do that. So we have most of the package have been over the years, P&C products and death cover part our side.
So that's what we have done with them, and we are currently doing that with them.
And as we are quite conservative, we have already deducted that from the CSM. I first mentioned that-
Yeah
... one hundred and thirty million euro CSM-related risk policies, that is already deducted. Nothing has decided yet, but, you know, we want to be conservative in that case.
Good. We have one question from Yuri Khodjamirian , from Autonomous Research, about capital generation, about what I guess an annual capital generation might be on a normalized investment assumption. And I appreciate it's gonna be difficult for you to give a number here, but I guess if you could talk through the moving parts a little bit on how to think about it, that might be helpful.
Okay, so when it comes to own funds generation in that part, so starting point is mark-to-market yield that we are expecting, 5.9%. And then it's, of course, up to everybody's view that what are they expecting from the private equity and private credit assets and so on. But let's say that we end up to 6.5% or whatever normalized return, and then we have this discount rate, liability discount rate. We have shown that curve somewhere in the appendix or somewhere there. If that is roughly 3%, 3.5% on average. Then if we assume that there will be nothing dramatic when it comes to future discount rates, then asset return 6% or 6.5, I don't remember anymore.
Five.
Okay, 6.5, and then, cost of liabilities, this unwinding cost, 3.5%. And then, of course, if interest rates are moving in line with the forward rates, then, change in discount rate is zero in that sense when it comes to costing, cost of liability. And then another element when it comes to this organic capital generation was that, SCR reduction due to business evolution. And as mentioned, we are expecting that to decrease as capital requirement is now, when it comes to portfolio, capital requirement is around 30% less than it was at the year-end.
So only also that SCR reduction and how much we expect capital to be released, to be released, that will also decrease around 30% or something like that.
... All right, one question on the, risk life fee business for corporate customers. Can you explain what that relates to?
So the business model is so in corporates, we are doing the pure risk life, mainly that covers disability, maybe short-term disability. We are not actively underwriting health insurance, so those are like pure life insurance company products, and one-time payment, more or less. What we are doing with corporates is, I guess the mainly we are, we are selling the coverage. Okay. Yeah, now it's working. Thank you. So, so mainly to key people in the companies, companies are buying the coverage, which we are underwriting, and but they are also growing business that many companies, because of lack of competent employment- employees, they are buying the coverage for the whole company, so all employees.
We just made, I'm not sure if I can, I can use that as a reference, but one of the largest companies in Finland, they insured more than 6,000 of the employees with our coverage. And so the whole company employees are covered with our death cover and disability. So that's what we are doing. It's pure risk life, and it's a good margin business to us, and we are on that side, that with that business, we are not only competing with Finnish providers, we are also competing with international providers. And we do also pooling with IGP in Europe, in Finland, so.
All right. From what I can see now on the online questions, I think we've covered what we can cover pretty much. Any final questions from the room, Jan-Erik?
Yes, going back to the with-profit books again, and your sort of your coverage for expenses as well as risks in those... In the good old days, we had investment return, administration results, and risk results. So two part of those were sort of covered by sort of you've been given premiums in the past, so we had a sort of a provision for that going forward, and those two are on your own risk. So how should we read your sort of provision or coverage when it comes to risk on having too high inflation or having disability and longevity above those numbers that you have provided for so far?
What's the risk on those portfolio, even though that they're going down the road, so it's easing, but how should we read those two risks going forward and maybe the next five to 10 years?
Yeah. Okay, part of those will be... Okay, economically, it's totally same, but part of those will be, will go through CSM and so on. So it does mean not totally go directly to the profit and loss. But that's, we will present sensitivities related to liabilities, and those sensitivities are also that kind of sensitivities that we should consider, so. But anyway, the main sensitivity is when it comes to discount rate. That is by far the biggest one.
Good. Everyone happy? Perfect. All right. I think that concludes today's event then. Thank you very much, everyone, for, for listening in and attending and for making the effort, and we look forward to seeing you on the road. Thank you.
Thank you.
Thank you.