Equity principle

Pursuant to Chapter 13, Section 2 of the Finnish Insurance Companies’ Act, the principle of equity must be observed in life insurance and investment contracts with a discretionary benefit feature. If the solvency requirements do not prevent it, a reasonable part of the surplus must be returned to these policies as bonuses.

The objective of Sb Life Insurance Ltd is to provide, in the long term, the insurance savings with discretionary benefits a total benefit (before charges and taxes) equivalent to the Finnish government’s long-term bond yields. For savings insurance policies, the target is to achieve a level of return equivalent to that of five-year bonds, whereas for pension insurance policies the target level for return equals 10-year bonds. The total benefit of an investment policy refers to the technical or annual interest of the insurance contract as well as the additional interest determined annually. The Board of Directors of Sb Life Insurance Ltd decides on the annual interest and additional interest annually, taking into consideration factors such as the general level of interest rates, the company’s long-term success in investment activities, the level of the technical interest of the insurance policy as well as the company’s solvency. The setting of the annual and additional interest also takes into consideration whether the company is required to prepare for higher-than-expected compensation for the insurance category in question, due to factors such as a significant change in mortality rates among the insured.
In risk life insurance, the equity principle is applied, on the part of death cover, in the form of increased compensation or reduced premiums. Continuity is given a high priority in setting the level of additional benefits.

The targets are valid until further notice. The Board of Directors of Sb Life Insurance Ltd has the right to revise the targets and principles within the restrictions stipulated by the legislation governing insurance companies. The published basis for the distribution of discretionary benefits and the application of the equity principle do not constitute part of the insurance contract.