The mutually owned life assurance company, Suomi, announced on December 21, 1999 that it was using its stake in the Finland’s second largest insurer, Pohjola, as the basis for an alliance of client-owned financial institutions. This means, that Finland’s largest insurance group, Sampo, which is merging with state-owned Leonia bank failed to gain control over Pohjola. Sampo has recently bought a 32,7 per cent of Pohjola’s voting right from Swedish Skandia and tried to buy Suomi’s 41 per cent voting stake in Pohjola. The decision of the Board of Directors of Suomi to sell the shares in Pohjola was unanimous.

Suomi sold the main part of its shares in Pohjola to new partners, Ilmarinen Mutual Pension Insurance Company, the OKOBank Group and two close associates to these companies for EUR 529 millions or EUR 65 per share. After the trade every alliance member owns approximately 5 per cent of Pohjola’s share capital entitling to 8,22 per cent of its voting right. Thus, the new alliance of client-owned financial institutions own 25 per cent of Pohjola’s share capital and 41 per cent of its voting right.

The CEO of Pohjola, Mr. Iiro Viinanen and Vice President, Mrs. Pirkko Alitalo, handed in their resignations straight after the announcement of the trade. The Board of Directors requested that they continue with their duties. Mr. Viinanen and Mrs. Alitalo accepted the request.

According to the alliance members the new alliance has at least at first a loose, strategic character. All the institutions involved in the trade will continue their own businesses. Pohjola’s main insurance businesses will be continued through the alliance members and the Pohjola’s assets not in direct connection with insurance business will be realised and paid as dividend to the shareholders.

However, it is commonly speculated that this will not happen without difficulties, since the realisation of Pohjola’s property has to happen in co-operation with minority-owners, especially Sampo-Leonia, which owns 32 per cent of voting stake in Pohjola. According to Sampo-Leonia’s CEO, Jouko K. Leskinen, this trade will not create a final solution in the restructuring of the insurance branch. It is a question about an exchange-listed company and all the decisions made have to benefit all shareholders, says Leskinen.

The new alliance has over 900 sales offices and over 3 million customers. The building of the alliance group will not have any significant direct effects on the staff.

For further information, please contact Pekka Lehtinen.

This article contains general information on the subject matter and shall not be relied upon for a specific case. Specialist advice should be sought with respect to any specific circumstances.