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					                                             Tapiola Group   www.tapiola.fi




                    Social Responsibility Report 2005
                                            Transparent operation




The purpose of sustainable development is to ensure a good living
environment for the present and future generations. The company’s
values, the character of its business and its operating environment
define the company’s social effects. For the Tapiola Group, mutuality
is a special characteristic that presents particular requirements for
openness and responsibility.
                                                         The Content
                                                         of the Report
         This is the third Social Responsibility Report published       topics and improve readability. The text does not follow
         by the Tapiola Group. It discusses the events, results and     the disposition suggested by the GRI, but the codes for
         effects of 2005. Additional information is available on        the key figures presented in the comparison table have
         our website at www.tapiola.fi > Briefly in English> Tapi-        been inserted in the text as superscripts, e.g. (123). This
         ola Group> Society and Environment (GRI 2.22) including the    facilitates the checking of data and hopefully helps read-
         principles of social responsibility at Tapiola. This report    ers unacquainted with the subject to understand why the
         includes some key figures used in the financial statements       text comments on something that appears strange, even
         in the insurance business. Their definitions are found in       irrelevant, in our society and at Tapiola in particular.
         Finnish at www.tapiola.fi > Tapiola-ryhmä> Taloudellisia
         tietoja> Tunnuslukujen määritelmät.                            Tapiola has continued to develop its statistics. For exam-
                                                                        ple, there are now more key figures available on personnel
         Where applicable, this report is based on the Global Re-       than before. The number of environment responsibility key
         porting Initiative (GRI) reporting recommendation. The         figures has also increased considerably. Now that Tapiola
         GRI is a leading international institution that develops       has joined the Green Office system, it can for the first
         sustainability reporting guidelines. These guidelines have     time present figures on carbon dioxide emissions. In the
         been useful for selecting the topics to be discussed. How-     previous reports the calculation has been too complicated
         ever, the recommended extent and level of detail can-          compared with the benefit achieved. The information on
         not be applied as such to a group of service companies         regional influence has also developed. Otherwise there
         doing business in Finland only, with abstract products         are no changes in the calculation methods. (2.19)
         that do not require storage, transport or packaging. Ex-
         ceptions from the GRI’s recommendations and incom-             We are proceeding towards external report certification.
                                                                        (2.20)
         plete key figures are listed in a comparison table at the              The preparation of this report involved preparing for
         end of the report.                                             the certification process by internal auditing. (2.21) The
                                                                        development and developing of reporting is discussed in
         Tapiola’s Social Responsibility Report is intended for         more detail later in this report. Some of the financial in-
         the customers and those representatives of the custom-         formation has been audited, and various other methods
         ers who participate in Tapiola’s management and the            were used to confirm the accuracy of the rest of the infor-
         advisory committees. They expect reports that do not           mation. The text of the entire report has been checked
         describe the Group’s business merely in numbers. The           and approved by the members of the Group’s Boards of
         structure of the present report has changed slightly from      Directors. The report was discussed in a joint meeting of
         last year. The objective was to clarify the structure of the   the Boards of Directors on 4 April 2006.




                           Topics in the Financial Industry in 2005
         • Survivor’s pension rapidly for the families of disap-          effects of the reform of the Act on Employee Pension
           peared tsunami victims                                         Insurance Companies
         • Responsibility of the individual vs. the society; too        • Puro’s committee investigates how the return from em-
           much trust in the social security system makes                 ployee pension funds could be improved while simul-
           people forget their need for individual security               taneously supporting Finnish work and ownership
         • Global warming is becoming more and more expensive           • Pension insurance companies’ investments in the
           for the financial industry                                      Finnish market cannot be increased
         • The damage caused by the January storms became a             • Information about banking services for the elderly
           credibility test for insurance companies
                                                                        • Expenses of mutual funds remain partly hidden
         • Insurance companies speed up the claims handling
                                                                        • Compare banks, not just margins
           of cars involved in the massive multi-car crash
                                                                        • Good reputation is a factor of success in the global
         • Matti Louekoski, Deputy General of the Bank of
                                                                          market
           Finland, was appointed rapporteur to study the




2   Tapiola Group
         Introduction by the President:                                        (1.2.)




       Responsibility Calls for Transparency

The Confederation of Finnish Industries EK recommends the expression ”responsible busi-
ness” instead of ”social responsibility”, at least when addressing the public. This certainly
facilitates the dialogue on this important topic. The matter is too important to be fostered
in the insider discussions of experts only.

Even at Tapiola, the concept of responsible business is not yet clear to everyone. I am sure
that anyone can list things that are well, but few would classify these as social responsibil-
ity. Even fewer can tell what social responsibility actually comprises, let alone identify it
in their daily work. However, responsibility already exists in our everyday life, but without a
label. Caring for the customers, the working community and one’s own responsibilities are
included in social responsibility.

Companies are part of the society, and each larger company is actually a miniature society
in itself. Even if a company makes good profit for the owners and customers and pays tax-
es, it cannot be responsible if it simultaneously spoils the nature and causes illness to em-
ployees or residents, for example. A company must keep its economy in proper condition,
but not at the cost of people and nature. We must also remember that our responsibility is
not limited to this day, or even to the day after tomorrow. We must not spoil our grandchil-
dren’s future either.

Tapiola is influential enough in the insurance and financial sector to have an effect on so-
ciety, local communities, other companies and families. Responsibility calls for openness
and transparency of operation and information. We must inform about our actions and
explain our solutions so that our owner-customers and other stakeholders understand
what we are doing and can evaluate our operation. This is the only way to demonstrate our
reliability and trustworthiness.

Mutuality presents special requirements for openness and re-
sponsibility in the Tapiola Group. The mutual company has been
established to satisfy our owner-customers’ service needs. The
customers benefit from our results and long-term operation, and
through competition the entire society benefits.




                                                    Asmo Kalpala
                                                       President




                                                                                                  Tapiola Group   3
                                                               Table of Contents

         The Content of the Report ......................................................................................................................... 2
         Topics in the Financial Industry in 2005 ...................................................................................................... 2
         Introduction by the President: Responsibility Calls for Transparency .............................................................. 3
         Table of Contents ....................................................................................................................................... 4
         Tapiola
         Tapiola Group ........................................................................................................................................... 6
                Service network from Tammisaari in the south to Kittilä in the north ..................................................... 6
                History goes back nearly 150 years .................................................................................................... 7
         Management
         Mutuality as a Special Feature .................................................................................................................... 8
                Supervisory boards have an important role in the governance by owners ................................................ 8
         Risk Management ...................................................................................................................................... 9
                Distribution of risk to the benefit of the customers .............................................................................. 9
         Social Responsibility Principles Based on Values ........................................................................................ 10
                Business idea and values ................................................................................................................ 10
                Distribution and organisation of social responsibility in Tapiola Group ................................................. 11
         Development of Quality Is Based on Self-Evaluation .................................................................................... 13
         Legality and Compliance with Agreements.................................................................................................. 13
         Society
         Responsibility Is Essential in Our Field of Business..................................................................................... 14
                We adhere to the rules .................................................................................................................... 14
                We bear our responsibility for the future ........................................................................................... 14
                Policies and principles of responsibility ............................................................................................ 15
                We are aware of the effects of our operation ..................................................................................... 15
         Mutuality in Practice ................................................................................................................................ 16
                Customers evaluate the realisation of mutuality ................................................................................ 16
         Interaction with Stakeholders ................................................................................................................... 17
         Review on Cooperation with the Stakeholders in 2005 ................................................................................ 17
                Agents represent Tapiola in customer service .................................................................................... 17
                Networks provide added value for customers ..................................................................................... 17
                Selection of subcontractors is based on values .................................................................................. 18
                Interaction with society .................................................................................................................. 18
                Cooperation with commercial and industrial life ................................................................................ 18
                Definitions for consumer cooperation ............................................................................................... 19
                Sponsoring and donations for socially responsible purposes ............................................................... 19
         Tapiola as Neighbour................................................................................................................................ 20
                Local impacts of Tapiola’s business ................................................................................................ 20
                Global cooperation based on protecting mutual interest ..................................................................... 21
         Social Distribution of Income 2004–2005 ................................................................................................. 24
         Economy
         Stable Development and Profitable Growth ................................................................................................. 25
         Year 2005 for Various Business Sectors ..................................................................................................... 25
                Non-life insurance ......................................................................................................................... 25
                Life insurance ............................................................................................................................... 26
                Employee pension insurance ........................................................................................................... 26
                Banking ........................................................................................................................................ 27
                Saving in mutual funds................................................................................................................... 27
                Asset management ......................................................................................................................... 27




4   Tapiola Group
Secure Investing of Assets Means Responsibility towards Customers ............................................................. 28
       Tapiola Pension’s principles of responsible investment....................................................................... 29
Real Estate Operations ............................................................................................................................. 30
       Construction and maintenance services ............................................................................................ 30
Other Financial Impacts ........................................................................................................................... 30
Personnel
Responsibility for Personnel Creates Foundation for Mutual Success............................................................. 31
       Year of change 2005 ...................................................................................................................... 31
       Number of personnel continues to grow............................................................................................ 31
       Participation increases commitment ................................................................................................ 33
       Incentive schemes ......................................................................................................................... 34
       Personnel benefits ......................................................................................................................... 34
       Labour union activity ...................................................................................................................... 34
       Satisfied personnel will prosper ....................................................................................................... 34
       Tapiolan Vire has been registered as trademark ................................................................................. 35
       Developing expertise based on the strategy ....................................................................................... 37
       Library Information Service guides to the source of knowledge ........................................................... 37
       Internal communication to support effectiveness............................................................................... 37
       Personnel expenses ........................................................................................................................ 38
       Training expenses .......................................................................................................................... 38
Customers
We Bear Our Responsibility for Customers and to Customers ........................................................................ 39
       Development of number of customers .............................................................................................. 39
       Service for the needs of the customers ............................................................................................. 39
       New products and services 2005..................................................................................................... 40
       Risk management services .............................................................................................................. 41
       International services ..................................................................................................................... 41
Research and Customer Surveys ................................................................................................................ 42
       Customer satisfaction studied in all customer segments..................................................................... 42
Marketing Communications Is Relevant and Ethical .................................................................................... 43
       Communications to customers......................................................................................................... 43
       Customer benefit policy .................................................................................................................. 43
       Share of customers in the profit 2005 ............................................................................................. 43
Environment
Saving Natural Resources is Part of Daily Work ........................................................................................... 44
       Tapiola Environmental Policy 2005.................................................................................................. 44
       Tapiola committed to Sustainable Development Charter ..................................................................... 45
       Green Office system and logo .......................................................................................................... 45
Real Estate Operations Environmental Key Figures ...................................................................................... 46
       New environmental programme for real estate operations planned ...................................................... 47
Information about Atmospheric Emissions Available for the First Time .......................................................... 48
       Environmental impacts of travelling ................................................................................................. 48
Paper Use and Posting ............................................................................................................................. 49
Environmental Impacts of Head Office Operations....................................................................................... 49

Development of Reporting ........................................................................................................................ 51
GRI Comparison ...................................................................................................................................... 52

Appendices
Key figures .............................................................................................................................................. 54
Contact information ................................................................................................................................. 55




                                                                                                                                                    Tapiola Group   5
                                                         Tapiola Group



         Tapiola is a group of companies owned by the policyhold-        Turva sells Tapiola’s life and pension insurances to its
         ers. (2.6.) It consists of four insurance companies – Tapiola   non-life insurance customers. For Tapiola, Turva is a busi-
         General Mutual Insurance Company (2.1.) (Tapiola Gener-         ness partner and a sales channel whose performance is
         al), Tapiola Mutual Pension Insurance Company (Tapi-            being monitored. The cooperation between Tapiola and
         ola Pension), Tapiola Mutual Life Assurance Company             Turva is managed at Board level and in various coopera-
         (Tapiola Life) and its subsidiary Tapiola Corporate Life        tion groups.
         Insurance Ltd (Tapiola Corporate Life) – and the finan-
         cial companies wholly owned by the mutual companies:            An expanding range of banking and insurance services
         Tapiola Asset Management Ltd, Tapiola Fund Manage-              is available to customers on Tapiola’s website on the In-
         ment Company Ltd and Tapiola Bank Ltd, which owns the           ternet, as well as claims service by telephone. Telephone
         majority of shares in the Fund Management Company. In           service is available from 8 a.m. to 8 p.m., with separate
         addition, the group of companies includes the IT service        service numbers for private and corporate customers and
         company Tapiola Data Ltd, which is a subsidiary of Tapiola      customers who need savings and investment services. In
         General, with Etera Mutual Pension Insurance Company            emergencies, Tapiola’s Emergency Service answers the
         as a minority shareholder. Tapiola Data also provides IT        calls of travel, household and motor vehicle insurance
         services for Turva Mutual Insurance Company. Turva is           customers 24 hours a day, every day of the year. For a de-
         a subsidiary of Tapiola General, but it prepares separate       scription of the product range (2.2.), please see Customers.
         financial statements and its figures and operation are
         not discussed in this report. (2.16) This applies also to the
         restaurant company Aura-Karelia Oy. In addition to the
         abovementioned, the group of Tapiola companies includes
         145 housing and real estate companies. (2.4.)

         For a review of the Tapiola Group’s ownership and gov-
         ernance by owners, please see Management.


         Service network from Tammisaari in
         the south to Kittilä in the north
         Tapiola’s head office is located in Tapiola, Espoo, at Re-                                                          Kemij rvi
         vontulentie 7. During the report year, plans were prepared
                                                                                                                       Rovaniemi
         to build a second headquarter office nearby. The purpose
         of the project is to place in two buildings the functions                                        Tornio
                                                                                                               Kemi
         now located in five separate buildings.                                                                             Pudasj rvi
                                                                                     Office of Tapiola
                                                                                     and Turva                     Oulu
                                                                                                                                Suomussalmi
         In 2005, Tapiola had seven regional units led by regional
         managers. The regional offices are located in Helsinki,                                             Raahe                   Kajaani

         Lahti, Turku, Tampere, Seinäjoki, Kuopio and Oulu. In                                             Ylivieska
                                                                                                     Kokkola
                                                                                                                                                 Kuhmo

         April 2006 the number of regions was reduced to six.                                                                       Iisalmi
                                                                                                                                                 Lieksa
         Tapiola’s services are available at 164 places of business.                                            Saarij rvi
                                                                                      Vaasa                                             Kuopio
         The company has 61 service offices in the biggest cities                               Lapua
                                                                                             Sein joki
                                                                                                                       nekoski                     Joensuu

         and 103 entrepreneur-lead places of business with a                                         Alavus            Jyv skyl
                                                                                                                                           Varkaus
                                                                                            Kauhajoki
         more limited range of services. Some of these are agency                                                           Pieks m ki               Kitee

         service points.                                                                  Kankaanp                   J ms
                                                                                                                                          Savonlinna
                                                                                                                                     Mikkeli
                                                                                      Pori     Tampere
                                                                                    Rauma Vammala
         Tapiola employs 2,730 professionals of insurance and                Uusikaupunki     H meenlinna                 Heinola
                                                                                                                                                Imatra
                                                                                                                                         Lappeenranta
         financing (2.8.), plus some 800 authorised insurance                        Loimaa
                                                                                               Forssa
                                                                                                         Riihim ki     Lahti
                                                                                                                         Kouvola
                                                                                  Turku                    Hyvink
         representatives. In addition, Tapiola gets corporate                             Salo Lohja J rvenp
                                                                                                                  Porvoo
                                                                                                                           Hamina
                                                                                                              Kerava Kotka
         customers through brokers. For market information (2.7.),                                 Espoo
                                                                                          Kirkkonummi         Vantaa
         please see Customers.                                                                           Helsinki




6   Tapiola Group
                                                                                   Bank
                                                     Asset management and fund
                                    Employee pension management companies
                                    insurance                                      2002
                   Life insurance
                                          1962        2000
                                                                                                                              Banking services
Non-life insurance          1920                                                                  Direct funds and asset management services

   1857                                                                                                         Unit-linked insurance solutions
                                                                         Calculated interest savings insurance and individual pension insurance


       ...           1920                              2000           2001         2002           2003           2004           2005              2006 ...




History goes back nearly 150 years                                           In the 1920s, non-life insurance was complemented by life
                                                                             insurance and in the 1960s by statutory earnings-related
Tapiola was founded on 18 June 1982, when the su-                            pension insurance. In 2000, Tapiola expanded its services to
pervisory boards of its predecessors, Aura and Pohja,                        the financial business by establishing an asset management
decided on the merger. The Group has operated under                          and a fund management company. In 2002, a decision was
the name of Tapiola since the beginning of 1984. Tapi-                       made to establish Tapiola Bank Ltd. The bank commenced
ola’s historical roots, however, date back to 1857, when                     business in February 2004.
a fire insurance association called Suomen Maalaisten
Paloapuyhdistys was founded.




Total figures for the insurance groups in Tapiola Group

                                                  2005 EUR million                 2004 EUR million                      change %
 Turnover                                                 2 589.0                           2 385.6                              8.5
 Premiums written                                         1 958.0                           1 798.3                              8.9
 Net investment income                                        636.5                           597.6                              6.5
 Claims incurred                                          1 736.6                           1 676.4                              3.6
 Operating expenses                                           167.0                           155.6                              7.3
 Investments at book value                               10 002.5                           9 242.3                              8.2
 Investments at current value                            11 405.6                          10 206.3                             11.8
 Capital and reserves                                         495.2                           429.9                             15.2
 Technical provisions                                    10 168.1                           9 370.5                              8.5
 Balance sheet total                                     11 165.9                          10 202.7                              9.4

The figures are audited.




                                                                                                                                       Tapiola Group         7
                                                              Mutuality as
                                                           a Special Feature

        Mutuality is the characteristic that best defines Tapiola                       In mutual insurance companies, the policyholders are
        among its competitors. In Finland, mutual companies                            also shareholders of the company. In Tapiola Pension,
        are found only in the insurance business. The limited                          shareholders also include employees covered by the TEL
        companies in the Group are completely owned by the                             employee pension insurance. The extent of ownership
        mutual companies, and therefore they also comply with                          makes the role of the supervisory boards distinctly dif-
        the principles of mutuality.                                                   ferent compared with listed companies.

        According to the statistics of the Federation of Finnish                       The policyholders exercise the power of the owner in the
        Insurance Companies, the share of mutual companies                             annual general meeting, where every shareholder has
        in the entire Finnish insurance market was 67.7% in                            one vote and additional votes depending on premiums
        2004, measured as premiums written. The high per-                              (Tapiola General and Tapiola Pension) or savings (Tapiola
        centage is explained by the fact that practically all                          Life). The general annual meeting appoints the members
        employment pension insurance companies in Finland                              of the supervisory boards, for example. The supervisory
        are mutual companies.                                                          boards have substantial power of decision and supervising
                                                                                       responsibility in our insurance companies. The supervi-
                                                                                       sory boards are assisted in their supervising activity by a
        Supervisory boards have an important                                           cooperation committee that consists of the chairpersons
        role in the governance by owners                                               of the supervisory boards.

        The Tapiola Group adheres to corporate governance (3.1.),                      The customers are also represented in Tapiola’s advisory
        which is based on the legislation concerning the finan-                         committees. The regional advisory committees and the
        cial and insurance business, the regulations issued by                         advisory committees for SMEs, agriculture and forestry
        the supervisory authorities and, when applicable, the rec-                     and Tapiola Bank promote the customer aspect in the
        ommendation issued by HEX Oyj, the Central Chamber                             group’s operations. The advisory committees take part
        of Commerce and the Confederation of Finnish Industry                          in feedback and development discussions on strategic
        and Employers in December 2003.                                                priorities, give feedback on services and make propos-
                                                                                       als (3.8.) to the Group’s Boards of Directors. The advisory
                                                                                       committees have about 280 members altogether.
                                                   Annual general
                                                      meetings

                                                 Supervisory boards*)
                                                                            Cooperation committee
                                                  Boards of Directors        of supervisory boards


                  Advisory committees                                         Round table Board
                                                                                  meeting


                                                                                                          Managing directors              Managing
                                                                                                                                          directors’
                                                                                                                                           meeting


          Banking, saving                         Corporate customers,
                                                                                                   Life assurance
          and investment    Private households      major customers         Tapiola General                             Tapiola Pension       Tapiola Bank
                                                                                                     companies
             services       Management Group       and organisations       Management Group                            Management Group     Management Group
                                                                                                  Management Group
         Management Group                          Management Group



                                                    Tapiola Pension
                                Investment                               Regional operations   Data management        Personnel affairs
                                                      investment
                             Management Group                            Management Group      Management Group      Management Group
                                                   Management Group


                            *) Tapiola Bank has no supervisory board




8   Management
Tapiola Pension has a pension affairs advisory commit-         More information on the Tapiola Group’s corporate gov-
tee, which is appointed by the Board of Directors. It con-     ernance is available in Finnish at www.tapiola.fi-> Tapi-
sists of representatives of labour market organisations        ola yrityksenä> Tapiola-ryhmä> Hallinto ja johto> Hal-
and Tapiola Pension. The committee has eight members,          lintomalli. (3.2.-3.3.)
and it issues statements on disability pension applica-
tions regarded as borderline cases. The committee met          For more information on mutuality in practice, please
11 times in 2005.                                              see Society.




                                       Risk Management                         (3.13.)




Risk management includes recognition, evaluation, re-          Distribution of risk to the benefit
striction and monitoring of business risks and opportu-        of the customers
nities in accordance with the agreed principles. The risk
management principles of the mutual group of companies         It is in the owner-customers’ interest to minimise the risks
promote the customers’ financial security. They emphasise       relating to new customer relationships. The current cus-
the importance of good solvency. The objectives include        tomers do not want to cover credit losses caused by new
responsible business that exceeds the minimum require-         customers or the costs of neglected risk management.
ments of legislation and official regulations so clearly that
the customers and other stakeholders trust Tapiola as a        We follow the principle of equality so that we protect the
partner who promotes their financial security.                  benefit of the owner-customers, i.e., the ones sharing the
                                                               risk. Our customer and risk selection instructions ensure
In the Tapiola Group, the boards of directors, the man-        that Tapiola’s customer base and insurance portfolio
aging directors and other directors are responsible for        remain healthy and our competitiveness is reinforced.
risk management and the updating and implementation            When the risk increases we utilise the best available ex-
of risk management plans. The audit committee that             pertise in decision-making. We have a special policy for
assists the cooperation committee of the supervisory           reinsurance.
boards also monitors and evaluates risks.
                                                               The Bank follows similar principles in lending. We en-
The controller working in Economy Services is responsi-        sure that our customers have sufficient regular income
ble for coordinating the risk management processes as a        to manage their loans, a flawless credit history and no
whole. The implementation and procedures of risk man-          unsettled financial obligations.
agement are also evaluated by internal audits. In addi-
tion, all Tapiola employees are responsible for risk man-      In addition, the bank requires an adequate security to
agement in their own work.                                     ensure that any unsettled amounts can be collected from
                                                               the income gained by selling the said security in a situ-
More information on the Tapiola Group’s risk management        ation where the customer no longer has sufficient income
is available in Finnish at www.tapiola.fi > Tapiola-ryhmä>      to pay back the loan.
Tapiola yrityksenä> Hallintomalli> Sisäinen valvonta,
riskienhallinta ja sisäinen tarkastus.




                                                                                                                   Management   9
                                   Social Responsibility Principles
                                         Based on Values                                 (3.7.)




         The Tapiola Group has conducted internal discussion on      Mutuality places special requirements on openness and
         social responsibility questions since the end of the        responsibility in the Tapiola Group. The Group’s Boards
         1980s. At that time, nine Tapiola principles were defined,   of Directors defined Tapiola’s social responsibility prin-
         and they were discussed among the personnel and the         ciples in 2002. A committee of 11 members constitutes
         governing bodies. This was a good foundation for build-     the preparatory body for issues relating to the develop-
         ing company culture and conducting value discussion in      ment of social responsibility, and it reports to the Board
         accordance with the ideas and opinions of the mid-          of Directors annually. The committee has representatives
         1990s. Along the years Tapiola has ended up with four       from different parts of the organisation. The Elected Rep-
         values that the personnel and management largely agree      resentatives represent the clerical employees and sales
         on, according to the results of regular work atmosphere     personnel. The merit pay system for the members of the
         surveys.                                                    Boards of Directors includes target criteria that are in-
                                                                     corporated in social responsibility (3.5.).


                                                                                (3.7.)
                                                     Business idea and values
          The business idea of Tapiola, owned by the policy-          ceed together in accordance with the customers’
          holders, is to provide its customers with benefits           benefit, and Tapiola and its customers succeed
          and sustainable solutions for well-being and suc-           together in the spirit of mutuality, when things are
          cess. The values define how the group of companies           managed correctly.
          implements its business idea. Our four values – the
          customers’ benefit, succeeding together, entrepre-           Entrepreneurship
          neurship and ethical operation – are closely linked
                                                                      Entrepreneurship is the value of innovative develop-
          together. Mutual values provide a solid foundation
                                                                      ment. It means being active and inventive. People
          for the Group’s strategic goals and success factors.
                                                                      and communities need both of these characteristics
          Customers’ benefit                                           to manage the constantly changing operating
                                                                      environment. Entrepreneurship is typically charac-
          Customers’ benefit is Tapiola’s primary value,               terised by strong commitment, capacity to react to
          because Tapiola is owned by its customers. All              changes in the operating environment and ability to
          customers are equal as owners. The owners are               operate in different environments. It also involves
          committed to Tapiola to satisfy their need for              the ability to find out about matters and understand
          financial security, not to wield power or aim for            how changes may influence one’s own operation.
          profit. This way ownership and customers’ benefit
          unite.                                                      In a community that emphasises entrepreneurship,
                                                                      the feeling of mutual responsibility is strong, and
          The customers’ benefit includes safe, long-term              everyone is concerned about the customers and
          overall affordability, responsible operation and            their needs.
          individual service. We are actively looking for
          solutions to meet the customers’ new, often individ-        Ethical operation
          ual, wishes.
                                                                      Being ethical means knowing the difference be-
          Succeeding together                                         tween the right to do and the right thing to do.
                                                                      Ethical values express the people’s education,
          Succeeding together is the value of cooperation and         culture and desire to commit themselves as mem-
          mutual feedback. It includes the ideas of partner-          bers of the community, as well as willingness to take
          ship and care. Mutuality and cooperation also               other people’s well-being into account. This idea is
          involve appreciating good individual performance.           reflected in the sentence: “Treat your customers and
          All employees must be given the opportunity to use          colleagues like you wish to be treated yourself.”
          their best skills to achieve our goals and to get
          support from superiors and colleagues when neces-           In everyday life, ethical behaviour involves being
          sary.                                                       reliable, fair, open, genuine, honest and reasonable.
                                                                      An ethical company knows its responsibility and
          Succeeding together is a concept that can be viewed         takes care to keep its reputation untarnished. It
          from many angles. Tapiola’s companies and units             adheres to laws, rules, guidelines and agreements.
          succeed by joining forces and avoiding competition          It keeps promises and meets obligations.
          between each other, Tapiola and its partners suc-




10   Management
                                              Distribution and organisation of
                                                                                  (3.6.)
                                         social responsibility in Tapiola Group


Supervisory boards and cooperation committee                    • The Local Operations Management Group introduces
• The supervisory board monitors financial responsibil-            the principles of social responsibility in customer
  ity by handling the financial statements and giving              service and reports on the development.
  a statement on them to the general meeting. At                • The Personnel Affairs Management Group defines
  Tapiola Pension it confirms the principles of Tapiola            personnel management policies at Group level,
                                                                  defines and updates personnel policy and monitors
  Pension’s funds investment plan.
                                                                  the development of personnel responsibility using
• The cooperation committee of the supervisory                    the selected indicators. It performs atmosphere
  boards monitors the Group’s financial and operative              surveys and initiates development work based on
                                                                  the survey results. It is also responsible for equality
  responsibility between the supervisory board meet-
                                                                  issues.
  ings and meets the auditors once a year.
                                                                • The Managing Directors’ meeting is also the Corpo-
• The supervising activity of the cooperation commit-             rate Security Management Group. It confirms the
  tee’s audit committee includes monitoring solvency,             annual social responsibility plan and implements
  risk management and compliance with laws and                    parts of it in each company’s annual plan.
  regulations; monitoring financial reporting; monitor-
  ing the work and independence of auditors; and                Business units
  assessing internal auditing, internal supervision and         • Each insurance company, the bank and the financial
  risk management.                                                service companies answer for their operation to the
                                                                  supervisory authorities: their financial responsibility,
Boards of Directors (3.4.)
                                                                  their own responsibility for the personnel and
• confirm the strategic plan and operating principles,             customers and also their attitude to environmental
  including the principles of social responsibility               issues.
• confirm the investment and risk management plan                • The Real Estate Unit creates, monitors and updates
  and the annual operation plan and budget and                    its own environmental policy and operating pro-
  supervise their implementation                                  gramme and participates in interaction with environ-
• develop services for the owner-customers                        mental networks in the real estate sector.

• approve the Social Responsibility Report.                     • The Social Relations Unit creates and maintains
                                                                  interaction particularly with external stakeholders,
Auditors                                                          leads the procedure of the social responsibility
                                                                  process, edits the report and prepares matters for
• ensure that the financial key figures in the financial
                                                                  the Board of Directors.
  statements comply with the laws and requirements
                                                                • The Risk Management Unit is an expert in environ-
• ensure the reliability of reporting.
                                                                  mental operation and provides environmental risk
Internal audit                                                    management services and guidance to the custom-
                                                                  ers.
• supports managers in their monitoring duties and
  provides the management with information and                  • The Market Research Team in the Marketing Servic-
  proposals for improving the efficiency of supervision            es Unit organises monitoring using external research
                                                                  services, utilises the research results to follow the
• participates in the development of the reporting                achievement of goals and monitors the development
  process.                                                        of the Tapiola Group’s reputation and image and the
                                                                  people’s awareness of the company from
Management Groups                                                 the angle of social responsibility, for example.
• The company management groups decide on
                                                                • The Personnel Services Unit plans, coordinates and
  operational responsibilities and plan the framework
                                                                  implements the Group’s personnel policy and
  of financial responsibility for the Board of Directors
                                                                  related services, e.g., training services and the Vire
  to decide on.
                                                                  programme.
• The Customer Segment Management Groups
                                                                • Communications Services is responsible for commu-
  introduce the principles of social responsibility in
                                                                  nications, e.g., by planning and carrying out internal
  the structures of customer service and product
  development and report on the development.                      and external communication.




                                                                                                                    Management   11
          Social Responsibility Committee                                        Other executive teams and committees
          • prepares and updates the principles of social                        • The Vire Executive Team monitors the personnel’s
            responsibility to be dealt with by the Board of                        well-being at work, decides on the annual Vire
            Directors                                                              themes and monitors the results of the Vire pro-
                                                                                   gramme.
          • prepares topics to be proposed for the Group’s
            annual plans                                                         • TAOS, the Tapiola Participation Committee, discuss-
                                                                                   es plans concerning the personnel, receives informa-
          • prepares and updates annual goals and indicators
                                                                                   tion on the Group’s financial situation and comments
          • initiates and maintains discussion on values and                       on the social responsibility principles and reporting.
            social responsibility
                                                                                 • Tapiola’s Environmental Team defines the environ-
          • organises the monitoring of results and participates                   mental strategy and programmes, monitors their
            in preparing the report.                                               implementation, informs about environmental issues
                                                                                   and organises environmental management in the
                                                                                   Group.
                                                                                 • The Sponsoring Team defines and updates the
                                                                                   principles of sponsoring, decides on cooperation
                                                                                   agreements and projects to be launched and
                                                                                   monitors the implementation of agreements.




                                                            SCENARIOS AND OPERATING ENVIRONMENT

                         Business idea                              Basis of uniqueness                                   Values
              Tapiola provides its customers with                Responsibility to customers                     Customers’ benefit
              benefits and sustainable solutions                                                                 Succeeding together
                  for well-being and success.                               Vision                                Entrepreneurship
                                                          We take care of our customers so actively               Ethical operation
                                                           and competently that they recommend
                                                                        us to others.




                                                                                                                                                  Strategic risks
                                                        Strategic selections that generate superiority

                Production of comprehensive                                                                 Expanding service solutions
                                                                         Cooperation
              services appreciated by customers                                                                   by networking

                                                                         Goal areas                                            Economy and
              Customer             Service processes                                                      Personnel            market position
                                                                                                                                   Growth
              Services               Service quality                                                      Competence
                                                                                                                                 Profitability
              Benefits                 Efficiency                                                        Work community
                                                                                                                                Market share,
                                                                                                                             coverage and brand
                                                       Implementation: processes and operative risks


         The strategic architecture steers the practical choices and implementation. The opinion on the present and future
         operating environment and competition is the foundation for forming the core of the strategy emphasising the customer
         dimension of mutuality – that is, the business idea, values, basis of uniqueness and vision. Strategic choices, i.e., the areas
         of operation where we aim to create superior competitive advantage, are defined for the three-year strategic period.

         The strategic architecture can be compressed into four goal areas: customer, personnel, service process and economy and market
         position angle. Each of these has two target areas with respective target levels. The definitions aiming to reduce strategic risks
         are included in the strategy architecture. The strategic architecture is the basis for the practical planning, operation and risk
         management expressed in the balanced scorecard frame.




12   Management
                                 Development of Quality
                              Is Based on Self-Evaluation                                  (3.20.)




A central element in Tapiola’s management model is con-         reform of personnel indicators. Results in both areas can
tinuous development of the quality of operation. This is        be expected this year.
carried out by annual self-evaluations based on the evalu-
ation criteria of the European quality award EFQM. Tapi-        At the turn of the year 2005–2006, Tapiola performed a
ola General won the Finnish Quality Award in 2000 in            social responsibility self-evaluation in accordance with
the service company category. In 2005, the areas Tapiola        the EFQM model. The report on the project was com-
General chose to develop included, for example, mod-            pleted in March 2006.
elling and utilisation of a long-term personnel plan and




                                   Legality and Compliance
                                     with Agreements                           (3.14.)




Managing directors steer their companies in accordance          We follow instructions that aim at good practices, and
with the law and the instructions and orders issued by          we adhere to agreements. The Finnish Insurance Com-
the Board of Directors. The management and the superi-          plaints Board is a body of the voluntary consumer pro-
ors are responsible for the results and appropriateness of      tection organisation in insurance business. We use its
operation in their respective performance areas. The Le-        recommendations as a guideline when we develop our
gal Services Unit supervises legality in the Tapiola Group,     own guidelines for claims handling. We monitor the per-
and the lawyers in the various units are also responsible       centage of cases where the Board has changed a deci-
for supervising legality. The secretaries of the Boards of      sion in favour of the customer. This is one of our qual-
Directors control the legality of decisions in the respec-      ity indicators in claims handling. If the percentage goes
tive companies and ensure that the Boards of Directors          up unexpectedly we investigate the reason and take the
handle matters in accordance with laws and regulations.         necessary corrective action.
Internal audit evaluates the implementation of internal
control and risk management in the organisation and
coordinates its work in cooperation with the auditors.
                                                                Tapiola at the Finnish Insurance Complaints Board
More information on internal control and audit is avail-        from 2001 to 2005; percentages of changed claims
able in Finnish at www.tapiola.fi > Tapiola-ryhmä>              settlements
Tapiola yrityksenä> Hallintomalli> Sisäinen valvonta,            Company           2001    2002      2003    2004      2005
Riskienhallinta ja Sisäinen tarkastus.
                                                                 POHJOLA           32      24        28      26        25

At Tapiola Bank, the lawyer appointed as the compliance          SAMPO-IF          37      25        38      34        28
officer is responsible for keeping in contact with the au-        TAPIOLA           24      39        22      24        26
thorities and ensuring that the bank obeys the law and           Total             36      31        32      33        30
follows instructions. The compliance officer is also respon-
                                                                Our objective at Tapiola is to keep the percentage of changed
sible for ensuring that the bank personnel’s instructions
                                                                claims settlements below average. This monitoring period in-
comply with the law and regulations and the bank manag-
                                                                cluded one year when this goal was not achieved. In 2002,
ers develop instructions and inform the personnel about         the number of complaints and the percentage of changed set-
legislation and official regulations relating to their respec-   tlements rose, but after an adjustment following training and
tive areas of responsibility. The fund management and as-       consulting the situation improved in the following year, being
set management companies also have compliance officers.          even better than before.




                                                                                                                      Management   13
                                           Responsibility Is Essential
                                            in Our Field of Business

          Insurance and financial business generates stability and       on legal incompetence and insiders are available to the
          safety in society, enabling financial activity by providing    personnel on the internal information network. The con-
          reasonable means for risk protection. Basic banking serv-     tent and application of the instructions are introduced
          ices are a necessity in modern society.                       to new employees during orientation. The employees are
                                                                        informed regularly about guidelines.
          In Finland, insurance companies play an important role in
          society by providing statutory earnings-related pension in-
          surance, employer’s liability insurance and motor liability   We bear our responsibility
          insurance. More than 60 per cent of the premium income        for the future
          in the entire insurance business comes from statutory in-
          surance. Pension insurance companies provide rehabili-        Active participation in the development of our own fields
          tation services and services relating to well-being at work   of business and industrial life in general, as well as in the
          to reduce disability pension costs and prevent premature      supervision of the interests of mutuality, constitutes part
          retiring. Insurance companies cooperate with various au-      of Tapiola’s responsibility for the future. We also partici-
          thorities to prevent injuries, fires and other accidents and   pate in the general discussion on social issues.
          crime. Insurance companies have many alternatives for
          providing services for the aging population.                  Tapiola is an active member (3.15.) in various organisations
                                                                        in the industry, including the Federation of Finnish In-
          In addition, insurance companies answer to the need           surance Companies and its committees and line-specific
          to complement social security voluntarily. More than          organisations, the Finnish Bankers’ Association, the Finn-
          500,000 Finns have complemented their earnings-re-            ish Association of Mutual Funds, the Finnish Centre for
          lated pension insurance with a voluntary pension in-          Pensions ETK and the Finnish Pension Alliance TELA. In
          surance policy. Currently there is a discussion going on      addition, we are involved as members in various business
          concerning the need for care insurance to complement          life organisations, like the Finnish Business and Policy
          sickness insurance. Voluntary life insurance provides se-     Forum EVA, the Confederation of Finnish Industries EK,
          curity for the future of the policyholder’s family in case    the Central Chamber of Commerce and regional cham-
          of the policyholder’s death. Voluntary non-life insurances    bers of commerce, as well as the Finnish Direct Marketing
          are also important for society. Correctly measured insur-     Association and the Association of Finnish Advertisers.
          ance cover is necessary for individuals in their everyday     We are also involved in international organisations, such
          life as well as for the risk-taking ability and development   as AISAM, ICMIF and ACME, which are international or-
          of business life.                                             ganisations of mutual insurance companies, and the In-
                                                                        ternational Chamber of Commerce ICC.

          We adhere to the rules                                        Tapiola provides expert services for dozens of various
                                                                        organisations, and Tapiola’s employees are involved in
          The Tapiola Group wants to be an active and responsible       many organisations relating to profession, counselling
          member of Finnish society. Obeying the law and comply-        and free time activities.
          ing with agreements are the foundation for everything we
          do. We follow closely the development of legislation and
          introduce our own opinions in the process, whenever pos-
          sible. We use our internal information network to keep
          the organisation up to date about changes in financial
          legislation. Stopping black economy and related crime
          is an essential part of our work.

          In addition to laws, agreements and good insurance,
          banking and business practice, insurance and banking
          secrecy are important obligations that apply to the entire
          personnel. Written instructions for secrecy, safety and
          information security policy with instructions, guidelines
          for insurance and claims handling, as well as regulations




14   Society
                                                  Policies and principles
                                                     of responsibility
                                                                                                               In addition to the policies
                                                                                        Ecological             and principles listed
 Financial responsibility                         Social responsibility
                                                                                        responsibility         here, there are various
 Risk management policy                           Personnel policy                      Environmental          written instructions, e.g.,
                                                                                        strategy               instructions on preventing
                                                                                                               money laundering, as well
 Investment plans                                 Safety policy                         Environmental policy   as regulations on secrecy,
                                                                                                               legal incompetence and
 Credit policy                                    Communications policy                 Environmental          accepting representation
                                                                                        programmes             and gifts. (S02)

 Purchasing policy                                Consumer policy
 Selection of responsibility; customer and risk   Principles of claims management
 selection instructions

 Reinsurance instructions                         Principles of social responsibility
                                                  Principles of sponsoring



                                                               (S04)
                     Recognitions to Tapiola’s personnel

 In 2005, many employees of Tapiola received public recognition for
 their social achievements.

 Corporate Brand Manager Kaisu Holopainen was selected the chairper-
 son of the Board of the Finnish Direct Marketing Association SSML as
 of 1 April 2005. She has been a member of the Board for 8 years.

 On 21 April 2005, The Tampere Chamber of Commerce & Industry
 awarded the Executives of the Year for the 11th time. Martti Silven-
 noinen, Regional Manager in the Tapiola Group, was awarded the title
 in the service business category. In addition to efficient performance,
 his merits include increasing the number of jobs in Tampere, after
 the Group decided to transfer some of its head office operations to
 Tampere.
                                                                                           Martti Silvennoinen receives the Executive
 The Rotary Club of Tapiola – Tapiola being also the name of a district                    of the Year diploma, presented by Tommi
 of the City of Espoo – selected Tapiola’s President Asmo Kalpala as                       Rasila, the Managing Director of the Tam-
 the most distinguished resident of Tapiola in 2005. His merits                            pere Chamber of Commerce & Industry.
 include developing the business centre of Tapiola and increasing
 the number of personnel in an economically healthy manner; his
 organisation now provides some 1,600 jobs in the Tapiola area.

 Development Manager Sanna-Mari Myllynen from Tapiola Pension was
 selected to Veikkaus Oy’s ethical committee for 2005–2006.




We are aware of the effects of our operation                                 Tapiola is a politically neutral group of companies, and
                                                                             therefore we can operate naturally with all decision-mak-
The Tapiola Group participates in the distribution of busi-                  ers. We participate actively in public discussion on the
ness risk and enhancement of household financial secu-                        development of statutory insurance systems, promotion
rity. Tapiola is an employer, investor, tax payer, builder,                  of responsible market economy and other social issues.
landlord and partner. We are aware of the effects of our                     The Tapiola Group wants to interact with the political par-
operation on society and our customers’ lives, and our                       ties, but this does not include supporting political par-
service development is based on this knowledge. For a                        ties financially, for example (SO5). Tapiola has developed
discussion on our customers’ health and safety, please                       guidelines (SO3) for cooperation with political parties, and
see Customers.                                                               adherence to these principles is being monitored.




                                                                                                                                             Society   15
                                                 Mutuality in Practice

          In a mutual company, the shareholders consist of poli-        decided to investigate whether mutuality has any particu-
          cyholders instead of investors. This company form gives       lar significance for the customers and how our custom-
          the customers the right to influence activity within the       ers’ ownership is realised in our operation. The Mutuality
          company, and also the right to benefit from the compa-         Committee was established to investigate this and report
          ny’s success. As the largest mutual group of insurance        on the findings. The Committee’s work is part of the work
          companies in Finland, Tapiola has adopted the role of         of the regional advisory committees, and it is a new form
          standard-bearer of mutuality. During this strategic period,   of organised interaction between the management of Tapi-
          Tapiola has focused on developing mutuality into a com-       ola and the representatives of the customers.
          petitive advantage. Therefore Tapiola’s Board of Directors




           Customers evaluate the realisation of mutuality              7. Tapiola is committed to stable, long-term opera-
                                                                           tion.
           The three advisory committees in each of Tapiola’s
           seven regions chose among themselves a representa-           Some of these statements are also possible in other
           tive to the Mutuality Committee. The Committee has           company forms, but they are more common in mutual
           seven members. The organising meeting was held in            companies and have a greater significance.
           May, and Ulla-Maija Moisio, Master of Laws, was
                                                                        All reference material available
           appointed as the chairperson. She had already
           participated in the experimental evaluation in 2004.         After the organisation meeting, the members of the
           The members comprise Reivo Järvenpää, Operations             Committee studied the exhaustive reference material
           Manager, Marja Malmstedt, Managing Director, Risto           and prepared their evaluation. The members had
           Palokangas, Director General of Regional Environment         access to any information they believed to be useful
           Centre, Sampsa Saralehto, Deputy Managing Director,          in the work. The Committee held an evaluation
           Matti Träskelin, Sales Director and Jorma Turunen,           meeting at the end of August. The Committee’s sup-
           Municipal Manager.                                           port team and Personnel Director Sirpa Kaisanlahti,
                                                                        who was invited to the meeting at the members’
           The committee had a thorough discussion concerning
                                                                        request, answered questions.
           the entire field of evaluation. The meeting identified
           seven elements of mutuality to be evaluated:                 The committee conducted a comprehensive discus-
                                                                        sion and prepared an evaluation statement. The
           1. The owner-customers and their representatives
                                                                        advisory committees discussed it in their autumn
              decide who runs Tapiola and in which direction.
                                                                        meetings, and in November it was introduced to the
           2. The advisory committees act as regional and               Group’s Boards of Directors and the supervisory
              industry-specific channels of influence.                    boards. Then an abstract of the statement was
                                                                        published on Tapiola’s website.
           3. The owner-customers have the right to profit from
              the company’s success.                                    The statement is available at
           4. As a mutual company, Tapiola increases competi-           www.tapiola.fi > Briefly in
              tion.                                                     English> Tapiola Group>
                                                                        Business Idea and Values>
           5. The development of products and services is               Customers Evaluate Mutuality.
              guided by customer needs.
           6. The personnel are committed to Tapiola’s values.
              The most important value is the customers’ bene-
              fit, which is based on the principles of mutuality.                       Ulla-Maija Moisio




16   Society
                              Interaction with Stakeholders

In addition to the owner-customers, the Tapiola Group          stakeholders. According to this guidance, the objective is
is involved in versatile ordained cooperation with other       interactivity, which means strong interaction with all the
stakeholders (3.9.). The advantages gained from this co-       stakeholders. The various parts of the organisation have
operation benefit Tapiola’s customers.                          a varying number of stakeholders. Any contacts resulting
                                                               from Tapiola’s representations or membership fees paid
In January 2005, the Tapiola Group decided on guidance         by Tapiola have been documented.
that defines the Group’s relations with society and the




                                 Review on Cooperation
                             with the Stakeholders in 2005
Tapiola wants to be an appreciated and reliable company        Networks provide added value for
and partner. Cooperation is necessary for bringing added       customers
value to everyday customer service. Interaction with vari-
ous representatives of society and industrial and com-         The objective of network cooperation is to provide benefit
mercial life involves objectives relating to the supervision   for mutual customers and reinforce Tapiola’s performance.
of interests. Reciprocal interaction with local organisa-      We select our partners from companies that are impor-
tions supports Tapiola’s possibilities to provide its cus-     tant in their own industry and have a value base close to
tomers with benefits and sustainable solutions for well-        our own. Tapiola is involved in network cooperation with
being and success.                                             the S group, Finnish Loss Survey SVT Ltd, the Central
                                                               Union of Agricultural Producers and Forest Owners (MTK),
                                                               the ProAgria Group, the Mortgage Society of Finland, and
Agents represent Tapiola in customer                           the real estate agent SKV.
service
                                                                Successful local services
Tapiola’s service network comprises 164 service points.         The Finnish Franchising
More than half of these are run by entrepreneurs who have       Association arranged a
a contractual relationship with Tapiola. The agents are         contest, and all the 25
important stakeholders with regard to customer service          member chains participat-
and sales. Authorised agents are called insurance repre-        ed. Tapiola’s local service
sentatives. They have achieved their position by complet-       chain took the third prize in
ing successfully the sales and product training provided        the category Franchising
by Tapiola. Insurance representatives and agents work           Chain of the Year. The
independently, without an employment relationship with          number of service points
Tapiola. Agent relationships are based on an agreement          and the increased turnover
                                                                contributed to this. In
that defines the agent’s obligations, rights and qualifica-
                                                                addition, Tapiola has
tions. The agents are bound by professional secrecy even        followed the Association’s ethical rules and developed
when they no longer work as agents. Tapiola has vicari-         the chain in close cooperation with the entrepreneurs.
ous liability for its agents.                                   Tapiola’s local service chain is Finland’s largest
                                                                insurance and financial business franchising chain.
Customer service complies with Tapiola’s values and
operation model. Tapiola is responsible for training the        The Finnish Franchising Association gives its
agents in these. To reinforce information, the agents have      member chains the opportunity to award one
                                                                entrepreneur in the chain with the Franny prize. In
an intranet website of their own. The Agency Advisory
                                                                2005, the Franny award (pictured above) went to
Committee is the channel for organised interaction. The
                                                                Tapiola’s most successful local service provider, HVK
Local Service Cooperation Group was established to de-          team Oy from Lappeenranta.
velop this vigorously growing service channel.
                                                                The awards were presented by Minister of Trade and
In 2005, the agents accounted for 29% of new sales, and         Industry Mauri Pekkarinen at the Franchising party
the share of car retailers operating as agents was 32%.         in Helsinki in March.




                                                                                                                      Society   17
          The cooperation between Tapiola and the S Group was             Selection of subcontractors is based
          launched in the spring of 1999, when the members of             on values
          the S Group began to receive bonus for Tapiola’s insur-
          ances. About one fourth of the S Group’s customers are          We select our subcontractors from companies whose val-
          also Tapiola’s customers, and one third of Tapiola’s cus-       ues and principles are parallel with ours. For example,
          tomers have the S bonus card.                                   our purchasing policy requires that the goods and serv-
                                                                          ices we purchase are of adequate quality and promote
          Finnish Loss Survey SVT Ltd is an expert company owned          sustainable development.
          jointly by Tapiola and Fennia. It has an important role in
          customer service relating to motor vehicle accidents. SVT
          has the largest loss survey organisation in Finland with 70     Interaction with society
          loss adjusters and 23 permanent loss survey stations, as
          well as loss survey points that are open on certain days,       We respect political neutrality, and open dialogue with all
          located in different parts of Finland. SVT’s loss adjusters     political parties is important for us. Interaction with the
          inform the customers about claims handling and calcu-           political decision makers is usually case-specific.
          late the vehicle’s repair costs. At the same time the cus-
          tomer may complete a damage report and turn in other            Tapiola’s relationships with the authorities function well.
          documents to be sent to Tapiola for claims settlement.          We aim to affect legislation through the Federation of
          SVT’s operation is based on the ISO 9001 (2000) qual-           Finnish Insurance Companies and its member organisa-
          ity management standards.                                       tions, the Finnish Pension Alliance TELA and the Finn-
                                                                          ish Centre for Pensions ETK. In matters concerning mu-
          Tapiola and the real estate agency SKV initiated their          tuality we aim to influence the decision-makers directly
          cooperation in May 2000. SKV has more than 80 offic-             and to inform them.
          es around Finland. Tapiola’s owner-customers get a dis-
          count on SKV’s commission when they are selling their           Tapiola’s own labour protection and rescue organisations
          own permanent residence.                                        as well as the risk management experts cooperate with
                                                                          the national and local authorities.
          The cooperation agreement signed with the Mortgage
          Society of Finland in 2001 grants Tapiola’s owner-cus-          As regards relationships with the media, Tapiola has es-
          tomers discounts on their housing loans.                        tablished its position as the best insurance company in
                                                                          Finland. We have the second best general image among
          The cooperation agreement with the Central Union of Ag-         financial service companies. This evaluation is based on
          ricultural Producers and Forest Owners (MTK) involves           Marketing Radar’s surveys, which we monitor regularly.
          developing the Tapiola Group’s products and services and
          marketing them to the members. The agreement includes           Cooperation with educational institutions and universi-
          membership benefit products and membership discounts             ties includes company visits relating to career counsel-
          as well as safety counselling. In 2004, an agricultural         ling, lectures on insurance and financing, and support
          safety campaign was launched for 2004–2006. Fire safety         and materials for students working on their final theses.
          at farms was the first theme of the campaign.                    We also provide summer jobs for students.

          The objective of the ProAgria Group is to reform agricul-
          tural counselling and to be a strong developer and network      Cooperation with commercial and
          former locally, regionally, nationally and internationally.     industrial life
          The cooperation with ProAgria includes arranging versa-
          tile quality training for farms and awarding the farm and       Tapiola, together with its competitors, is involved in vari-
          young farmer of the year. More than 400 farms enjoy the         ous organisations promoting the interests of the banking
          quality bonus for audited farms.                                and insurance sector.

          Tapiola’s cooperation with Agropolis Oy involves develop-       We have arranged Entrepreneurs’ Evening School lectures
          ing a solution for the management of the environmental          since 1998, in accordance with a cooperation agreement
          load resulting from horse races and promoting the well-         with an entrepreneur organisation. There are about twenty
          being of racehorses. Tapiola’s role in the project is to pro-   events around the country each year. Tapiola also sup-
          vide expert assistance for investigation and management         ports women entrepreneurs by sponsoring the Kultainen
          of environmental risks and, in the future, for prevention       Oras (“Golden Sprout”) award, granted every other year.
          of accidents. Other partners in the project include Agri-       The Taito (”skill”) award is granted in alternate years
          food Research Finland MTT, Suomen Hippos ry and the             with the Golden Sprout, in cooperation with the Finnish
          Equestrian Federation of Finland.                               Crafts Organisation.




18   Society
The Central Chamber of Commerce and the chamber of            culture (Albert Edelfeldt exhibition at the Ateneum Art
commerce organisation are important partners for us. In       Museum and a valuable violin for Tapiola Sinfonietta) and,
September we participated in the Chamber of Commerce          to some extent, also exercise and sports, mainly the free
Forum 2005 event under the theme “Proactive personal          time activities of the personnel’s children.
risk management is an investment in the company’s fu-
ture”. We are also involved in other educational coopera-     At the end of 2005, Tapiola signed an agreement with
tion with regional chambers of commerce.                      the Finnish Red Cross to support its volunteer friend visi-
                                                              tor service during the next three years. The position as
                                                              the main partner in the friend visitor service is financial-
Definitions for consumer cooperation                           ly and operationally the most important social respon-
                                                              sibility project that the Tapiola Group has ever spon-
As regards cooperation with the consumer authorities          sored. The objective of the cooperation is to emphasise
and other influential parties, the Tapiola Group has up-       Tapiola’s mutuality and social responsibility and to en-
to-date, written definitions and objectives for consumer       courage Tapiola’s large customer base to become volun-
policy as the guideline for the development of its opera-     teer friends to lonely elderly people in particular.
tion. The definitions focus on sustainable and ethically
acceptable procedures, availability and quality of services
and active interaction with the stakeholders.

Tapiola’s Consumer Forum is a discussion forum for Tapi-
ola’s management and influential consumers. It has estab-
lished its position as part of the Group’s interaction with
the stakeholders. The objective of the Consumer Forum
is to introduce Tapiola’s management, administration and
experts to influential consumers, and also to give the com-
pany management the opportunity to hear the opinions
of influential consumers and representatives of admin-
istration on problems and developments concerning the
consumers. In 2005, Tapiola’s 10th Consumer Forum dis-
cussed the problems associated with insurance and bank-
ing services, based on research and practical experience.

Interaction with influential consumers has affected the
development of insurance terms and conditions, proce-
dures and, for example, banking services. Justifying the
decisions is a permanent problem in insurance and fi-
nancing. Many joint and individual development projects
have tried to find solutions to this problem, but there is
still a lot of work to do in this area.                       Secretary General Kristiina Kumpula and Communications
                                                              Director Hannu Laiho (left) from the Finnish Red Cross and Director
                                                              Arto Jurttila and Corporate Brand Manager Kaisu Holopainen from
                                                              Tapiola signed the agreement on the Finnish Red Cross volunteer
Sponsoring and donations for socially                         friend visitor service.
responsible purposes
Sponsoring at Tapiola aims to promote Tapiola’s com-
pany image and generate added value and benefits for           In 2005, the Tapiola Group used about EUR 300,000
the customers. When we select objects and partners, we        for sponsoring and donations. (EC10)
consider values and bear social responsibility.
                                                              For more information on the principles of sponsoring,
Donations from the Board of Director’s available funds        please see www.tapiola.fi
are made annually for the public good, primarily for the      > Briefly in English> Co-operation> Sponsoring.
good of children, youth, disabled war veterans and other
disabled persons and for supporting medical science and
damage prevention, for example.

In 2005, Tapiola has supported road safety ( e.g., the
House of Safety in Vantaa), youth work (by sponsoring
the Finnish Red Cross’s safe house for young people),




                                                                                                                        Society     19
                                                             Tapiola
                                                          as Neighbour

          Tapiola wishes to be a good neighbour and interact well                 possible. The Tapiola Group encourages its personnel to
          with the neighbouring communities. The neighbouring                     participate in social activity and to influence their local
          communities include, for example, the municipalities                    environment.
          housing Tapiola’s offices, inhabitants of the neighbouring
          regions, provincial and local decision-makers and other
                                                                                                                                          (3.17.)
          influential people, provincial and local newspapers and                  Local impacts of Tapiola’s business
          other members of the press, organisations and educa-
          tional establishments.                                                  The Tapiola service organisation has been divided into
                                                                                  seven local units, which are delimited in the text below
          Tapiola recognises its role as an influential local party.               the local impact table. We carefully monitor development
          Tapiola is a tax-payer, an employer, a balancer of busi-                of our local key figures, and for the past twenty years we
          ness risks, a guarantor of the inhabitants’ financial safety             have been able to publish our annual result, for exam-
          and also a landlord at times.                                           ple, based on the local figures. The key figures are writ-
                                                                                  ten down and monitored based on the local unit division.
          Cooperation with the regional and local media is organ-                 Thus, we do not monitor provincial figures, for example.
          ised. Publicity when, for example, communicating infor-
          mation about the performance of Tapiola`s local units, or               Tapiola’s business operations have many impacts on the
          when opening a new office, or in connection with some                    surrounding environment throughout Finland. We affect
          other local event, will improve interaction with the sur-               employment and purchasing power, which we can meas-
          rounding environment and also better Tapiola’s local busi-              ure by monitoring the salaries, excluding other personnel
          ness opportunities.                                                     expenses, paid in a local unit. Well-being produced for
                                                                                  inhabitants and tax-payers can be measured using the
          Tapiola’s local and regional offices take care of relations              premiums earned and claims paid in a region. The item-
          with their neighbours in different manners. Representa-                 isation does not include the impacts of the head office
          tives of Tapiola visit local educational establishments to              operations on local business life in Espoo and Tampere
          give lectures, or students visit the representatives at their           and in the Kuopio Customer Service Centre. In the lo-
          workplace. Safety evenings, traffic safety campaigns and                 cal communities, we actively participate in responsible
          similar activities are arranged in cooperation with the lo-             interaction following the same values as in our national
          cal authorities and the local department of the Finnish                 activity. We have not considered it necessary to draw up
          Red Cross, etc. Lately, customer events have been ar-                   any separate local policies. (SO1)
          ranged mainly around the themes of saving and invest-
          ment; people are interested in these subjects and many                  The number of customers is an indicator of how many
          need more information.                                                  lives and assets Tapiola secures in its areas of influ-
                                                                                  ence. The indirect effects of security and operations
          Representatives of Tapiola are actively involved in activi-             with respect to corporate customers also touch the per-
          ties of local Chambers of Commerce and Finnish associa-                 sonnel of the customer companies, but their share is
          tions of entrepreneurs. Open days are arranged whenever                 not monitored.



          Regional purchases of goods and services from local companies (€ 1,000)
                                             PKS           L-S             S-S             Poh           K-S          I-S          P-S
           Services connected
                                             256           193             206              93           164          142          177
           with personnel
           Apartment services                256           268             234              80           184          190          237
           Office and other services          215           208             191              32            80           76          137
           PR, advertising and other
           marketing services                476           362             520             317           260          262          451

           Total                            1 203        1 031            1 151            522           688          670         1 002




20   Society
Local influence in GRI reporting also includes a market                  was 30.2% in the Eastern Finland Region and 31.3%
share of at least 25% in a performance area. The share of               in the Northern Finland Region. The share of 24.7% in
Tapiola in so-called vehicle registration statistics in 2005            South-Eastern Finland is also close to the limit.




                                                                                     (EC13)
Local impacts of Tapiola’s business in numbers
          Number of                 Salaries and
  Re-                                                   Premiums             Claims paid           Private             Corporate
          personnel    Agents *)    remunerations
  gion                                                  (EUR 1,000)          (EUR 1,000) 1)        customers 2)        customers 3)
          (persons)                 (EUR 1,000)
  PKS           138         460                6 346          651 457                    106 236            155 797             3 977
  L-S            93         508                5 810          224 345                     59 895            116 865             2 288
  S-S            99         544                6 489          261 330                     58 417            132 259             2 797
  Poh            56         291                2 998          132 725                     33 651             69 434             1 350
  K-S            94         328                5 298          209 148                     50 703             98 596             2 284
  I-S            84         491                5 782          200 770                     52 956            107 557             2 566
  P-S            93         552                7 099          228 665                     75 397            126 391             3 337

Abbreviations:
PKS = The Greater Helsinki Area, including the Helsinki area and        *) The number of agents here includes all who have signed
      its surroundings.                                                    an agency agreement. The figure is not comparable to the
L-S = South-Western Finland, including the provinces of                    figures given in the report for 2004, because those figures
      Satakunta and Finland Proper, the western parts of the               included only personal agents.
      province of Uusimaa and the entire province of Åland.
S-S = The Central Finland Region, including the provinces               1)    The claims paid do not include pension-benefit-type em-
      of Birkaland, Häme Proper and Central Finland.                          ployee pension and life insurance claims paid.
Poh = The Ostrobothnia Region, including the provinces
      of Ostrobothnia, Southern Ostrobothnia and Central                2)    The private household customers include households, farms
      Ostrobothnia.                                                           and entrepreneurs.
K-S = The South-Eastern Finland Region, including eastern
      parts of the province of Uusimaa and the provinces                3)    The corporate customers also include corporations. The
      of Päijät-Häme, Kymenlaakso and Southern Karelia.                       number does not include corporate customers written under
I-S = The Eastern Finland Region, including the provinces                     major customer services.
      of Southern and Central Savonia as well as the province
      of Northern Karelia.
P-S = The Northern Finland Region, including the provinces
      of Oulu and Lapland.


The share of banking services and fund savings has not                  surance and banking group Länsförsäkringar of Sweden.
been itemised. The Greater Helsinki Area, the Central                   In 2005, Gjensidige-Nor of Norway was also included.
Finland Region and the South-Western Finland Region                     However, in December 2005 the Norwegian Gjensidige
have included the most fund savings customers. Loans                    terminated the cooperation agreement due to increased
to and investments in the regions have not been itemised                competition between Gjensidige and the Swedish Läns-
either. Support to local hobbies, cultural and organisa-                försäkringar in Sweden and Norway.
tional activities has not been reported as of yet.
                                                                        Cooperation with the international mutual company or-
Goods and service purchases by Tapiola from local com-                  ganisation AISAM as well ICMIF and the European divi-
panies also support the business life of each region.                   sion ACME aims at improving the business opportunities
                                                                        of companies owned by their customers. Tapiola’s execu-
                                                                        tives are included in the management and committees of
Global cooperation based on protect-                                    AISAM and ACME. In cooperation with AISAM, we have
ing mutual interests                                                    actively strived to promote a directive proposition that
                                                                        would have an impact on European mutual companies.
Insurance activity also includes division of risks with the             The European corporate legislation regarding mutual com-
help of global reinsurance. Tapiola practices mutual co-                panies would offer mutual insurance companies the same
operation within the Nordic countries in the Nordic Al-                 business opportunities as limited companies.
liance. In addition to Tapiola, the Alliance includes in-




                                                                                                                                        Society   21
                                                   Interaction with stakeholders
           Stakeholder                 Method of interaction                                 Monitoring system
                                       (form, channels and documentation)                    (number and regularity)

           Customers = owners          Continuous interaction with customers and a           Several thousand feedback items are received every year
                                       feedback system. Annual customer and service          through the customer feedback system; all of the feed-
                                       environment studies.                                  back is processed and saved. In 2005, as many as 5,000
                                                                                             feedback items were received via the Internet. Annually,
                                       Advisory Committees for each region and sector,       approximately 15 customer satisfaction and market
                                       the Mutuality Committee and the Youth Forum are       studies as well as approximately 30 studies on customer
                                       established forms of interaction.                     groups are conducted.

                                                                                             The Advisory Boards offer plenty of feedback and sugges-
                                                                                             tions. In 2005, the Advisory Boards offered the Boards of
                                                                                             Directors 70 initiatives in order to improve the services
                                                                                             of Tapiola.

                                       Good documentation exists for the various forms of interaction. Reports created based on this documentation
                                       are reviewed in line with the agreed-upon principles.

           Personnel                   Established interaction channels include the          Each body makes decisions about meeting practices
                                       TAOS (the Tapiola Participation Committee), the       based on their schedules.
                                       Equality Committee, the Labour Protection Com-
                                       mittee and the Social Responsibility Committee.       A work environment study, “Succeeding Together”, is
                                       Participants of the personnel are also included in    conducted every two or three years, and a motivation
                                       the Supervisory Boards and Executive Teams of         study “Status of the Team” annually. The results are
                                       the various units.                                    used in the development plans of the units.
                                       Minutes are drawn up for all the meetings.

           Agents, representatives,    Established cooperative bodies include the Agency     The Advisory Committees meet four times a year based
           franchising entrepreneurs   Advisory Committee and the Local Service              on an established practice. Furthermore, the parties keep
                                       Cooperation Group. Minutes are drawn up for the       in touch in other ways as well.
                                       meetings. Furthermore, regular interaction in         The results of a biannual study are used to develop the
                                       work-related issues is conducted in the various       agency operations.
                                       regions.

           Cooperation partners        Cooperation with the S Group is taken care of by      The cooperation with the S Group is continuous and
           in customer relations       dedicated contact persons.                            practical.
                                       Cooperation with the Finnish Loss Survey SVT          Meetings with the SVT and Turva are held at regular
                                       takes place at the management level.                  intervals.
                                       Cooperation with Turva takes place through the        The interaction is practical.
                                       cooperative bodies and at the management level.
                                       Minutes are drawn up for the meetings, and
                                       memos for other negotiations.

           Subcontractors, suppliers   Cooperation is based on agreements. Negotiations      The quality of products and services is continuously
                                       are held whenever necessary.                          monitored.
                                       Memos are drawn up for negotiations, and docu-        The interaction is practical.
                                       ments are drafted for all agreements made.

           Competitors                 Tapiola, together with its competitors, is included   Meetings are held regularly.
                                       in organisations promoting the interests of the       The actions of the competitors in the market are
                                       banking and insurance sector. Minutes are drawn       monitored and analysed in connection with strategic and
                                       up for the meetings.                                  annual planning.




22   Society
 Stakeholder                        Method of interaction                                  Monitoring system
                                    (form, channels and documentation)                     (number and regularity)

 Authorities                        Interaction mostly occurs through organisations        Interaction with the supervisory authorities is continuous
                                    monitoring the interests of the sector, except for     and regular. Other forms of interaction do not occur in
                                    the supervisory authorities, with whom interac-        any ordained manner. Background information is given
                                    tion is direct. Furthermore, direct contacts are       upon request.
                                    made and statements given in some questions
                                    regarding the preparation of legislation. Tapiola
                                    also delivers background information to the
                                    authorities.

 Social decision-makers             Cooperation with political decision-makers is con-     The interaction includes annual or case-to-case discus-
                                    tinuous and mostly well established. The parties       sions regarding underlying issues. However, most of
                                    take care of documentation.                            the interaction takes place through the organisations
                                                                                           promoting the interests of the sector.

 Other organisations: business      Meetings are held and information is communi-          Organised meetings with the labour market organisa-
 and labour market organisa-        cated with labour market organisations. Meetings       tions take place at least once a year. Meetings with the
 tions and NGOs                     are held with the labour unions that own a share       labour unions take place at least twice a year. Coopera-
                                    of the guarantee capital of Turva. Cooperation         tion with business organisations based on agreements
                                    with business organisations includes both coop-        and other forms of established cooperation is continu-
                                    eration based on agreements and other forms of         ous.
                                    established cooperation and exchange of informa-       Cooperation with NGOs is either based on agreements,
                                    tion. Forms of established interaction include the     such as the cooperation with the Finnish Red Cross, or
                                    Consumer Forum and the Entrepreneurs’ Evening          arises from local needs.
                                    School events. Minutes are drawn up for the meet-
                                    ings and documents made for any agreements.

 Media                              Seminars and press conferences regarding is-           A Business Reporter Study is conducted once a year.
                                    sues of topical interest are arranged whenever
                                    necessary. Representatives of Tapiola meet with
                                    reporters and editorial staff on a regular basis.


 Neighbouring communities           Normal interaction and communication of                Customer service studies are conducted every year.
                                    information take place with the neighbouring
                                    communities. Open days and joint projects are
                                    arranged whenever necessary.

 Educational establishments         We support persons writing theses and studies at       Annually, 2–4 doctoral theses in which Tapiola has par-
 and the scientific community        several levels by preparing material, answering        ticipated are completed as well as dozens of lower level
                                    questionnaires or giving interviews. Representa-       theses, and a number of lectures are given in universi-
                                    tives of Tapiola visit universities as lecturers. We   ties. Dozens of groups of schoolchildren and students
                                    offer visits to neighbouring schools and summer        visit the various Tapiola offices every year.
                                    and timework for students.

 Finnish and international sector   Cooperation to promote mutual interests,               Self-evaluation
 organisations                      participation in committees and creation of best
                                    practices.

The results of the interaction with stakeholders are evaluated by means of studies, in connection with planning processes and
during performance review discussions.




                                                                                                                                                      Society   23
                                                             Social Distribution
                                                           of Income 2004–2005

          Tapiola Mutual has published a report on the social dis-                            the various stakeholders. At the same time, the distribu-
          tribution of income in its annual report since 1977. The                            tion of income shows the impacts of the Tapiola Group
          social distribution of income describes what items com-                             as a socially influential party. (EC7, EC8)
          prise the total income and how they are divided between


                                                                                                   2004                                      2005
                                                                                      EUR M               Share, %           EUR M                   Share, %
           Income from insurance operations *)                                         1 893.5                73.3            2 051.5                      74.0
           Reinsurers’ share                                                                15.8               0.6                   5.9                     0.2
           Net investment income                                                         671.6                26.0              708.9                      25.6
           Other returns and expenses                                                        2.9               0.1                   4.5                     0.2
           Total income                                                                2 583.8               100.0            2 770.8                     100.0
                                                                                                   2004                                      2005
                                                                                      EUR M               Share, %           EUR M                   Share, %
           Paid as claims to customers **)                                             1 884.2                72.9            2 064.3                      74.5
           Reinsurers’ share                                                                26.1               1.0                  19.2                     3.0
           Personnel ***)                                                                   82.5               3.2                  83.9                     3.0
           Other operating expenses = suppliers                                          120.2                 4.7              139.0                        5.0
           Society (direct and indirect taxes and public payments)                       354.1                13.7              352.8                      12.7
           Tapiola Group                                                                 116.6                 4.5              111.5                        4.0
           Distribution of income                                                      2 583.8               100.0            2 770.8                     100,0

            *) Insurance premiums paid by policyholders minus public payments paid to the state.
           **) Claims and pensions paid based on insurance contracts as well as the amount reserved for future claims and pensions.
          ***) Salary and remunerations paid to the personnel as well as social security costs.




                                                                                                                                           Change from
           Solvency of the Tapiola Group companies                                                                                         the beginning of the year
                                                                                                                 2005        2004          as percentage units
           Non-life insurance                 solvency ratio                                                         219.7   221.3                          -1.6
           Life insurance                     solvency capital, % of technical provisions                             19.1    17.9                           1.2
           Pension insurance                  solvency margin, % of technical provisions                              24.1    20.7                           3.4
                                              solvency margin, relative to solvency limit, times                       2.6     2.8                          -0.2
           Banking                            solvency ratio                                                          11.1    26.9                         -15.8
           Fund business                      solvency ratio                                                     199.3       248.4                         -49.1
           Investment service business        solvency ratio                                                         102.1    95.8                           6.3




24   Society
                                      Stable Development and
                                         Profitable Growth

The result of the Tapiola Group for 2005 is the best                     Objectives and results 2005: Finances
yet. The good result is based especially on the invest-
                                                                         Combined ratio for Tapiola General: Objective 106, actual ratio 104.1.
ment activity, which offers excellent profit as a whole.
As indicators of financial responsibility, we monitor the                 Number of bank customers (customers with bank accounts):
results, solvency and expense ratio of the companies as                  Objective 40,000, actual number 40,000.
well as the net investment income of Tapiola Pension,                    Objectives 2006: Finances
and discounts and benefits to the customers offered by
the entire group.                                                        Combined ratio for Tapiola General: Objective 107.
                                                                         Number of SME corporate customers: Objective +
No decisions or agreements have been made that would
have an impact on the operations as a whole. Changes
                                                                       The monitored areas in the Tapiola scorecard are customers,
have not either occurred in the calculation unities moni-              personnel, finances and market position as well as processes.
tored. (2.13.—2.15.) A review of the indirect financial impacts of      Above is a description of the objectives set and their realisa-
the operations is included in the local review, see Society.           tion in 2005 as well as the objectives for 2006.



                                           Year 2005
                                 for Various Business Sectors
The year 2005 started out with expectations that the                   Distribution of Tapiola General premiums written
fairly good financial outlook for Finland would continue.               divided into regions in 2005
Various indicators for trust showed an increase in the
beginning of the year. Uncertainty about growth in ex-
ports had increased in the previous autumn. Export was
still expected to increase when compared to the previ-                          Northern Finland 15.8%
ous year, but it was anticipated that the slow-down in
                                                                                                             Greater Helsinki Area 24.3%
the strengthening of the euro and in the world economy
would limit growth. The Tapiola economic cycle forecast
in January 2005 stated that if the euro continues to be                    Eastern Finland 12.7%
overrated when compared to the US dollar for a long
time, investments and gradually also industrial jobs will                                                          South-Western Finland 13.0%
move elsewhere. No fast relief for the unemployment                 South-Eastern Finland 12.8%
problem was in sight. The anticipated growth rates were
not seen as adequate to notably decrease the unemploy-
ment rate. On the other hand, it was stated that not even                                                   Central Finland 14.3%
fast economic growth would necessarily be able to create                           Ostrobothnia 7.2%
new jobs due to the global structural change underway:
the structural change will lead to new positioning of the
workforce and capital.


Non-life insurance
                                                                       premiums. In the future, the situation will be corrected
Tapiola General’s market share continued to grow prof-                 with risk management actions and more specific analy-
itably, as it has continued to do uninterrupted for more               ses of new customers.
than a decade now. Tapiola’s solvency remained at an ex-
cellent level. The claims ratio in some of the insurance               The market share of Tapiola General increased to 18.2
categories is still too high, which means that the entire              per cent from 17.5% the previous year. The market share
clientele will share the costs of damages by paying higher             describes the company’s significance in the market.




                                                                                                                                                  Economy   25
          Together with the entire insurance sector, Tapiola is cur-            Terveyspalvelut (“Health services”) Oy. For more infor-
          rently adding new types of damage to the scope of flood                mation on the new products and services to customers,
          insurance. Climate changes will lead to increased risk                please see Customers.
          of unexpected flood damage, and customers need to be
          able to prepare for this also by means of insurance. For              Customers are showing rapidly increasing interest in pre-
          additional information about the performance of Tapi-                 paring for self-initiated savings for their retirement and
          ola General, please visit www.tapiola.fi > Briefly in Eng-              other services promoting personal welfare. The services of
          lish > Financial Data > Annual Report > Tapiola Group                 an insurance company could improve the possibilities of
          Annual Report 2005 > Tapiola General.                                 elderly persons to live on their own. In the future, Tapio-
                                                                                la’s pure risk insurance policies will be even more clearly
                                                                                directed towards supplementing social security.
          Life insurance
                                                                                For additional information about the performance
          The tsunami that struck Southeast Asia in December                    of the Tapiola life insurance companies, please visit
          2004 revealed how poorly Finns had arranged their life                www.tapiola.fi > Briefly in English > Financial Data >
          insurance coverage. Risk life insurance received plenty               Annual Report > Tapiola Group Annual Report 2005 >
          of attention in the media, and sales of pure risk insur-              Tapiola Life.
          ance increased in the entire sector by 24% when com-
          pared to the previous year.
                                                                                Employee pension insurance
                                                                                At the beginning of 2005, a pension reform entered into
          Distribution of Tapiola Life premiums written divided
                                                                                force with the aim of encouraging Finns to remain lon-
          into regions in 2005
                                                                                ger in working life. This would reduce the pressure of
                                                                                increasing pension expenditure. Some figures already
                                                                                indicate that the reform objectives are being achieved.
                   Northern Finland 17.6%
                                                                                Many other development projects are also underway. The
                                            Greater Helsinki Area 22.9%         most important one for Tapiola Pension is a significant
                                                                                increase in the amount of loading profit to be refunded
                                                                                to customers, since the company is the most cost-effec-
             Eastern Finland 12.8%                                              tive pension insurance company in Finland.
                                                  South-Western Finland 12.5%

        South-Eastern Finland 11.1%                                             Distribution of Tapiola Pension premiums written
                                                                                divided into regions in 2005
                                            Central Finland 14.7%
                       Ostrobothnia 8.4%                                                   Northern Finland 9.3%


                                                                                    Eastern Finland 9.1%
          The solvency of the Tapiola life insurance companies was
          better than ever before, and therefore the companies were
                                                                                                                    Greater Helsinki Area 40.8%
          able to offer customers higher no-claims bonuses than
                                                                                 South-Eastern Finland 10.1%
          competitors. The market share of premium income was
          6.3% compared to 6.9% the previous year. However, in
          the pure risk insurance market, which is one of the focal                Ostrobothnia 6.4%
          areas, the market share of premium income increased
          to 21.3%, showing growth of 0.2 percentage unit. The                                                     South-Western Finland 11.0%
                                                                                          Central Finland 13.4%
          market share of savings accrued was 8.3% compared to
          8.7% the previous year.

          Tapiola Life launched new products for the needs of the
          owner-customers. The most notable were severe sick-                   Tapiola Pension reached a higher market share in sales
          ness insurance, group pension insurance for rewarding                 of new pensions than the insurance portfolio premiums
          key personnel of the customer companies and employ-                   written. The market share increased to 15.8 per cent
          ees’ treatment security to complement the occupation-                 from 15.4 per cent the previous year. The company was
          al health care of the customer companies in the Great-                not as successful in the competition for pension insur-
          er Helsinki Area, developed in cooperation with Diacor                ance transfers.




26   Economy
The pension reform caused a backlog in the operations in                Later on in the year, the fund selection was expanded
the beginning of the year, but the situation has stabilised.            with a special fund investing in real estate and a fixed-
At the turn of 2005 and 2006, joint pension calculation                 income fund investing in corporate loans. For addition-
and payment systems with Etera Mutual Pension Insur-                    al information about the performance of Tapiola Fund
ance Company were taken into use. This IT cooperation                   Management Company Ltd, please visit www.tapiola.fi
has notable operational and financial impacts, and it will               > Briefly in English > Financial Data > Annual Report >
be continued despite the fact that Etera will become a                  Tapiola Group Annual Report 2005 > Tapiola Fund Man-
competitor at the turn of the year. For additional infor-               agement Company Ltd.
mation about the performance of Tapiola Pension, please
visit www.tapiola.fi > Briefly in English > Financial Data
> Annual Report > Tapiola Group Annual Report 2005                      Asset management
> Tapiola Pension.
                                                                        Tapiola Asset Management Ltd manages the security in-
                                                                        vestments of Tapiola General and Tapiola Life as well as
Banking                                                                 the funds of Tapiola Fund Management Company. The
                                                                        company also offers its services to the customers of the
Tapiola’s banking operations are a part of the Group’s                  Group. The cornerstone of the operations is a solid risk-
comprehensive service to private household customers.                   corrected return on the assets under management in all
As expected and planned, the result still showed losses.                market conditions while avoiding any unnecessary risk
During its two years of operation, Tapiola Bank has gath-               of losing capital. The essential operating methods in in-
ered 50,000 customers. Early in the year the bank ac-                   vestment activity are an analytical approach, long-term
quired a majority holding in Tapiola Fund Management                    operations and active asset management.
Company Ltd by acquiring 70 per cent of the shares of
the company.                                                            In 2005, the assets managed grew by almost 18% and
                                                                        stood at about EUR 4.6 billion at the end of the year. The
In 2005, the company has tried to the direct the attention              asset management company is one of the six largest Finn-
of the press and influential consumers to the total prices               ish asset management companies. This year, the compa-
of banking and financing services instead of allowing the                ny will invest in improving and speeding up reporting to
marketing of single products to lead them astray. The best              customers as well as further strengthening management
parts of Tapiola Bank’s services include interest rates in              of investment risks. For additional information about the
line with the daily balance and banking services, cards and             performance of Tapiola Asset Management Ltd, please
web services offered free of charge to the owner-custom-                visit www.tapiola.fi > Briefly in English >Financial Data
ers. For additional information about the performance of                > Annual Report > Tapiola Group Annual Report 2005 >
Tapiola Bank Ltd, please visit www.tapiola.fi > Briefly in                Tapiola Asset Management Ltd.
English > Financial Data > Annual Report > Tapiola Group
Annual Report 2005 >Tapiola Bank Ltd.
                                                                                       Tapiola Group turnover 2000 – 2005 (EC1)

Saving in mutual funds                                            EUR m
                                                                   3000
The year 2005 was the mutual fund
company’s fifth year of operation. Fund
capital increased by 33%, exceeding                                2000
the limit of one thousand million eu-
ros shortly after the turn of the year.
The company is the eighth largest of
the 24 Finnish mutual fund compa-                                  1000
nies. During the year, the number of
mutual fund unit owners increased by
48 per cent. Independent evaluations                                     0
of the funds have been positive. For                                          2000     2001     2002     2003      2004     2005
example, the mutual funds managed                       Tapiola Bank                                                4.2      5.1
by the company were included in the       Tapiola Asset Management                      2.0       1.8     1.7       1.9      3.0
top three in the comparison of Finn-      Tapiola Fund Management                       0.9       1.6     2.1       3.1      4.4
ish fund management companies in               Tapiola Corporate Life          94.3     95.9     94.1     85.3     89.4    109.2
the mutual fund guide published by                   Tapiola General           286.2   249.5    227.9    265.2    263.3    272.3
Arvopaperi magazine. This was due to                     Tapiola Life          550.5   530.5    528.8    622.3    668.3    725.4
the good return to risk ratio.                       Tapiola Pension          1135.3   1178.3   1111.9   1356.2   1369.4   1477.4




                                                                                                                              Economy   27
                                              Secure Investing of Assets Means
                                              Responsibility towards Customers

         The idea with insurance is that policyholders with the                         ments. An independent and extensive in-house analysis of
         same risk pay their insurance premiums into a joint “cash                      investment targets is an important part of the investment
         register” from where claims will be paid to all policyhold-                    process. When making investment decisions, we strive to
         ers incurring damage. Those assets that are not needed                         avoid investments that would contradict our values.
         for immediate payment of claims will be securely and
         profitably invested in accordance with the Insurance                            Tapiola carries responsibility for the people and commu-
         Companies Act.                                                                 nities in which the company operates. Due to the nature
                                                                                        of the insurance business, the financial responsibility of
         Tapiola General and Tapiola Life purchase services re-                         an insurance company is very close to this social respon-
         lated to securities portfolio management, carrying out of                      sibility. We follow these principles also in the guidance of
         investment activities and support services for investment                      our owners. We support Finnish business by, for example,
         activities from Tapiola Asset Management Ltd. The asset                        participating in financing the growth of companies.
         management company operates in line with the invest-
         ment plans of Tapiola General and Tapiola Life. Tapiola                        In the companies we own, we work mainly through an-
         Pension has a separate investment organisation and in-                         nual general meetings. By preparing for the meetings
         vestment plan.                                                                 we ensure that a good board of directors is chosen, for
                                                                                        example, and make sure that the company operates in a
         The investment activities of Tapiola aim at achieving a                        responsible manner in line with the interests of our share-
         high and stable return in the long term under all condi-                       holders. Participation in shareholders’ meetings takes
         tions while avoiding excessive risk of losing capital. This                    place primarily in Finland and in the neighbouring areas
         approach supports the general principles of responsible                        for companies in which Tapiola has major holdings. We
         investment activity, where all financial, social and eco-                       avoid situations where belonging to a group of insiders
         logical viewpoints are taken into account in all the invest-                   would limit operational freedom.


                                                                                        Average overall income from investment activities for
                                                                                        Finnish pension insurance companies
         Total return on Tapiola Pension
                                                                                        %
         investment portfolio 2001 – 2005                                               12
                                                                                        11                                                                  11.6
         %
         10                                                                             10
          9                                                                      9.2     9
          8                                                                              8
                                                                                                                                    8.0               7.9
          7                                                           7.2                7
                                                     7.0
          6                                                                              6
          5        5.2              5.3                                                  5
          4                                                                              4
          3                                                                              3
          2                                                                              2
          1                                                                              1
                                                                                                  1.1
          0                                                                              0                          0.5
                  2001             2002             2003             2004        2005            2001             2002             2003              2004   2005
              The average annual return over the last five years has been 6.8%.          The average annual return over the last five years has been 5.7%.
                                                                                        The figures do not include Tapiola Pension and Pensions Alandia.




28   Economy
Tapiola Pension’s principles of responsible investment         In-house analysis as a basis for
                                                               an investment decision
“The cornerstone of Tapiola
Pension’s investment activity                                  Tapiola’s in-house investment analysis plays a key
is regular and active interac-                                 role in the investment process. The investment
tion with the management of                                    activity is based on an approach including careful
the companies and with the                                     company analyses and regular company visits.
boards of directors when nec-                                  Investments are made in attractively-priced, profit-
essary. There are hundreds                                     able, growing and solvent companies. When making
of meetings every year, and
                                                               investment decisions, we strive to avoid investments
thus knowledge of the versa-
tility of business life and busi-
                                                               that would contradict our values. The expertise and
ness operations in general is                                  procedures of the company management are as-
increased,” says Investment                                    sessed to ensure the creditability and long-term
Manager of Tapiola Pension,                                    success of governance. Thus, there is no need to use
Hanna Hiidenpalo.                                              any investment methods actively excluding certain
She was the chairperson of a committee studying the op-        industries or countries.
portunities of the pension insurance companies to increase
their investments in the Finnish market. The study was part    Responsibility cannot be transferred
of the operations of a Pension Advisory Committee led by
Managing Director Kari Puro. The committee studied how         In investment activity, the responsibility cannot
risk-carrying capacity could be increased to improve returns   be transferred to any third party. That is why the
from employee pension funds and thus reduce the need for       company needs to know the investment targets as
increases in employee pension premiums.                        well as possible. Therefore, investments cannot be
                                                               targeted at companies with sustainable development
The investment return of Tapiola Pension is one of
                                                               indexes only, because the basis for their evaluation
the social responsibility indicators monitored by
                                                               may be notably different from the investment
Tapiola. Pension insurance companies play an
                                                               principles of Tapiola Pension, and in practice the
important role in society by providing pension
                                                               investments focus too much on the largest compa-
insurance services. The most important task of
                                                               nies. With a careful in-house analysis, the company
Tapiola Pension is to secure the pensions of the
                                                               aims at the best return potential available, and thus
customers. The assets received from pension
                                                               investments are often made in other companies than
premiums are being increased in order to be able to
                                                               the largest ones. Small and medium-sized compa-
pay current and future pensions. This is why the
                                                               nies are rarely included in these indexes. However,
company strives to accrue as good a return for the
                                                               the composition of various indexes is being actively
investments as possible within the chosen risk level
                                                               monitored and interaction with consultants in the
under all market situations. This requires expert
                                                               sector is conducted. Consultants are used to moni-
investment operations as well as an in-house
                                                               tor trends in order to react to potential problems
analysis and operations in line with the Group’s
                                                               together with other agents.
values.

Investment activities aim at reaching a high and               Increased significance of interaction
stable return in the long term in all conditions while         A little more than a third of the monetary value
avoiding excessive risk of losing capital. This                of Tapiola Pension’s share portfolio is invested in
approach supports the general principles of respon-            companies that are included in the sustainable
sible investment activity, where all financial, social          development indexes. The rest of the companies are
and ecological viewpoints are taken into account in            small and medium-sized companies not included in
all the investments.                                           the consultants’ monitoring scope. Most of these
                                                               companies are small Finnish or Nordic companies.
Solidity and productivity                                      In these cases, the significance of company visits and
The most important principles in investment activi-            annual meetings with company executives is even
ties are the solidity and productivity of investments.         greater. During the meetings, social responsibility
The objectives are to secure investment assets and             may also be handled in addition to other issues.
generate the highest returns at the chosen level of
                                                               In mutual fund investments, typically made outside
risk, within the framework of balance sheet require-
                                                               Europe, the company attempts to follow the same
ments. In the long term, the company needs to
                                                               values as in direct investments: the responsible
acquire the given absolute minimum return on the
                                                               portfolio managers must be known to the company
investment portfolio.
                                                               and their investment policy must be in line with the
                                                               Tapiola Pension policy. Regular meetings many
                                                               times a year are held with the portfolio managers
                                                               in charge of mutual fund investment decisions, and
                                                               the same issues are handled with them as in
                                                               company meetings.




                                                                                                                 Economy   29
                                             Real Estate Operations

         Tapiola is a notable real estate owner in Finland. At the     risks for the real estate investment sub-markets. Those
         end of 2005, the market value of the Tapiola real-estate      sub-markets that meet the required criteria and have the
         portfolio totalled EUR 1.55 billion. The Tapiola Group        best return outlook will be selected.
         Real Estate Unit constructs and maintains offices and
         apartments as well as rents them out to customers and
         arranges services connected with the real estate. Further-    Construction and maintenance
         more, the unit is responsible for financial management         services
         and reporting regarding the real estate capital and pre-
         pares real estate investment projects for the Investment      When the Tapiola Group Real Estate Environmental Pro-
         Activity Executive Team and the boards of directors.          gramme was updated, new environmental and life cycle
                                                                       objectives for construction of office and business build-
         In 2005, the real estate investments of the Tapiola Group     ings for the years 2005–2008 were established. The
         totalled ca. EUR 135 million. Positive value changes and      programme aims at retaining environmental issues as a
         regular cash flow are expected from the long-term real es-     priority also when planning new buildings in which Tapi-
         tate investments. The most important criteria used when       ola is an investor or when making repairs in real estate
         choosing real estate investments are the expected profits      owned by the Tapiola Group. Environmental instructions
         and related risks. When evaluating risks, environmental       for architects were also updated at the same time. The
         risks connected with the real estate are taken into ac-       instructions also related to design categories and plan-
         count and evaluated for the entire life cycle of the real     ning of humidity-related structural parts.
         estate, from construction and use all the way to demoli-
         tion. Real estate investments are realised either by pur-     The life cycle and environmental objectives for buildings
         chasing a ready-made target or by constructing a new          will be further specified when the classification in line
         property. In all cases, previous use of the real estate or    with the Energy Performance in Buildings Directive is
         plot is studied, and condition evaluations and environ-       implemented in its entirety in Finland in 2009. The di-
         mental reports are ordered when necessary.                    rective will have an impact on the building of new sites
                                                                       and the repair of existing ones. The directive includes
         The starting point for the process of selecting and invest-   a calculation method for the energy efficiency of build-
         ing in unlisted real estate funds is a macro-level analysis   ings and a requirement for an energy efficiency certifi-
         of the real estate investment market, paying attention to     cate that must be available when a building is taken
         the political and economical operating environment, ma-       into use, sold or rented out. Furthermore, the directive
         turity, transparency and liquidity of the real estate mar-    requires regular inspections of heating boilers and ven-
         ket, economic growth as well as return opportunities and      tilation machinery.


                                         Other Financial Impacts                                 (3.17.)




         Transfer to an electronic invoicing and payment system        reminder if an invoice remains unhandled for more than
         has improved markedly Tapiola’s own payment behaviour,        two days. During the spring of 2006, automatic posting
         which was previously problematic due to the complex           of invoices from regular customers will be possible. This
         organisation. In 2005, Tapiola received approximately         will speed up the process even more. The objective is to
         74,000 invoices. In the previous year, the company re-        include orders in the same electronic system within the
         ceived almost 75,000 invoices. Of these invoices, 81%         next few years.
         were paid by the due date compared to 63% the previous
         year. We are unable to reach a situation where 100% of
         the invoices are paid by the due date, because an invoice     Development of purchases of services
         connected with real estate activity cannot be paid before     and goods in 2003 – 2005                      (EC3)

         verification of the quality of the work, for example. (EC4)
                                                                        (EUR m)                            2003   2004       2005
         At present, already approximately 15% of the invoices          Tapiola General. Group             33.6   34.0       40.6
         arrive at Tapiola in electronic format. An electronic in-
                                                                        Tapiola Life. Group                13.3    9.3        7.6
         voice will be included in the Tapiola payment system the
         day following the day on which the supplier’s system pro-      Tapiola Pension. Group              9.0   10.9       10.6
         duced the invoice. The system also issues an automatic         Total                              55.9   54.2       58.8

                                                                       The figures are audited.




30   Economy
                          Responsibility for Personnel Creates
                            Foundation for Mutual Success

As a mutual company, Tapiola carries responsibility for                 Year of change 2005
the personnel as an employer and responsibility for the
customers as an expert. Tapiola’s responsibility for the                The results of the working environment study conducted
personnel is complemented by the mutual responsibility                  in the spring of 2005 showed a slight weakening com-
of the personnel for Tapiola’s success. Responsibility for              pared to the previous level. This was probably caused by
the personnel means having a good personnel policy and                  the demanding changes in the service process in the local
carrying the responsibility of an employer. Competent,                  organisations. However, the fact that so many persons an-
service-oriented and motivated personnel who like their                 swered the questionnaire showed that the personnel wish to
work are an important factor in the success of a company.               influence issues. At the demand of the Group’s Boards of
                                                                        Directors, several projects for developing information flow,
Well-being at work and the expertise of the personnel are               leadership and cooperation were started in the spring. Due
priorities monitored by the Group. They are at the root of              to these projects, the internal atmosphere study conducted
all success. There are excellent opportunities for devel-               in the autumn already showed an improvement.
oping expertise; in the past years, we have focused espe-
cially on web learning and training for supervisors.                    The overall satisfaction index of the working environment
                                                                        study in 2005 was 59.8% compared to 61.3% in 2003.
A new personnel policy was implemented and widely                       According to the study, the biggest change for the bet-
presented during the spring. The central idea in the new                ter was found in the improved knowledge of the central
policy is the principle of reciprocity: Tapiola commits to              content of the Tapiola strategy. The most important ar-
being a responsible employer but also expects the employ-               eas of development related to the need to cut bureau-
ees to work in a responsible and committed fashion. The                 cracy, boost the effectiveness of operations and lessen
employees of Tapiola feel that the Tapiola practices pre-               competition between the various companies and units,
sented in the personnel policy are their own creation.                  as it hinders operations.

In the next few years, the baby boomers will retire, and
an extensive change of generation is expected at the                     Tapiola Data one of the 100 best workplaces in
management level, for example. This is why the Group                     Europe (EC3)
has paid attention to gathering and utilising information
based on the long experience of employees, planning for                  Tapiola Data was one of the six Finnish companies
replacements has been started and the personnel has                      that were included in the list of the one hundred
                                                                         best workplaces in Europe. The best workplaces
been encouraged to try job circulation.
                                                                         were sought using the Great Place to Work in
                                                                         concept in 15 European countries. Companies from
                                                                         17 sectors were included.

 Objectives and results 2005: Personnel                                  In 2003, Tapiola was included in the top ten
                                                                         Finnish workplaces and in the top hundred Europe-
 Status of the Team study mean value: Objective 8.3, actual ratio 8.2    an workplaces.

 Presentation of savings products: Objective 20%, actual ratio 20%.

 Objectives 2006: Personnel                                             Number of personnel continues
 Claim service availability 83%.
                                                                        to grow
                                                                        The past ten years have been a time of continuous de-
 Overall commitment 0.80.
                                                                        velopment for the Tapiola Group. During these years, the
                                                                        number of personnel has increased strongly, for exam-
The monitored areas in the Tapiola scorecard are customers,             ple by 144 persons last year. At the end of 2005, the
personnel, finances and market position as well as processes.            number of personnel employed was 2,730. The number
Above is a description of the objectives set and their realisa-         includes all those in an employment relationship with
tion in 2005 as well as the objectives for 2006.                        Tapiola, i.e., permanent and fixed-term employment re-
                                                                        lationships, part-time employment relationships and per-
                                                                        sons on holiday without pay. This year, the personnel are
                                                                        expected to grow by up to 200 persons. (LA1)




                                                                                                                               Personel   31
          Personnel divided according to type of                                           Employment relationship age structure
          employment contract                                                              31 December 2005

           Employment contracts            Permanent          Fixed-term     Total                      35+ years 4.4%
           Head office, Espoo                     1717                169          1886
           Local organisation total               590                 90             680
                                                                                                       25–34 years
           - Greater Helsinki Area                124                 14             138                   11.7%
           - South-Western Finland                 82                 12              94                                          0–4 years
           - Central Finland                       86                 26             112                                          37.4%
                                                                                                      15–24 years
           - South-Eastern Finland                 86                   8             94                  18.9%
           - Ostrobothnia                          48                   9            57
           - Eastern Finland                       79                   7            86
                                                                                                                    5–14 years
           - Northern Finland                      85                 14              99                            27.6%

          At the year-end, 78 persons were on part-time pension.
          During the past few years, this figure has remained al-
          most the same. The peak year was 2003 when there were
          101 persons on part-time pension. The number has de-
          creased since then.
                                                                                           Education distribution 31 December 2005,
          Approximately ten per cent of the entire personnel are in                        entire personnel
          a fixed-term employment relationship. Most of the fixed-
                                                                                               Researcher education 0.6 %
          term relationships are due to temporary employees filling                                                          Basic-level education
          in for those on family leave, or to timework suited to the                                Higher                  6.7 %
          life situation of the employee in question, for example a                                 university degree
                                                                                                    14.6 %
          student. The number of fixed-term employment relation-
          ships decreased at the end of 2002 and has remained the
          same as the number of personnel has increased.                                                                         Medium-level
                                                                                                   Lower                         education
          The turnover of permanent staff was 4.2%. The internal                                   university degree             30.6 %
                                                                                                   16.0 %
          turnover rate, or the rate of personnel transferring to new
          tasks inside the company, was 11.0%. (LA2)
                                                                                                              Vocational
                                                                                                              degree
          The increase in the number of personnel also shows in
                                                                                                              31.4 %
          the personnel’s age structure. Approximately 40 per cent
          of the employees of Tapiola have been employed by the
          company for less than five years, more than a quarter have

          Age structure 31 December 2005
          500
                                                                      477
                                                                                           Education distribution 31 December 2005,
          450                                                                              new personnel
          400                                                  425
                                                                                               Researcher education 0.4% Basic-level education 2.7%
          350                                           374                 375
                                                                                                       Higher university
          300                                                                                          degree
          250                                                                                          13.5%
                               258
                        246
          200
          150                        168                                                                                         Medium-level
                139                                                                                  Lower university            education
          100
                                                                                                     degree                      43.9%
           50                                                                     77                 27.8%
                                           33
            0
                              Men                                    Women                                          Vocational
                                                                                                                    degree
                                                                                                                    11.7%
                  –29           30–39           40–49           50–59         60–




32   Personel
been employed for 5–14 years and the rest for a longer            There are 12 members, four of whom represent the em-
period of time. Of all the employees, 4.4 per cent have           ployers and eight various personnel groups. The chair-
been with the company for more than 35 years.                     person changes every other year and is a member of the
                                                                  employer and a member of the personnel in turn. There
                                                                  is a separate Participation Committee for Tapiola Data.
Participation increases commitment                                TAOS held four meetings in 2005.

One precondition for the good financial success of the             Since 2001, the Supervisory Boards of the insurance
Tapiola Group has been the commitment of the personnel            companies have each included a fully authorised repre-
to their work and to continuous improvement of quality.           sentative of the personnel. Representatives of the per-
                                                                  sonnel are also included in the Executive Teams of the
In order to secure confidential relations and constructive         various business units and regions. Representatives of
interaction between the employer and the employees, there         the personnel are included in all of the most important
is a full-time elected representative for the office person-       committees of the Tapiola Group, such as the Value Man-
nel of Tapiola, assisted by a deputy representative work-         agement Committee, which has been renamed the Social
ing part-time. Furthermore, there is a negotiating elected        Responsibility Committee. The personnel also participate
representative and his/her deputy in each office. The sales        in compilation of the annual operation plans. (LA13)
personnel, bank clerks and employees of Tapiola Data all
have an elected representative working part-time.                 The joint corporate body of the employer and the person-
                                                                  nel in equality issues, the Equality Committee, is a part
In case of restructuring, the personnel will be given in-         of Tapiola’s efforts to increase participation. The tasks of
formation and negotiations will be conducted as regu-             the committee include, for example, promotion of Tapio-
lated by agreements and law (LA4). There is no retraining         la’s equality objectives and preparation of equality plans.
programme in case of termination, because this has not            Three of the six members of the committee are repre-
been deemed necessary (LA16). Instead of a life-long learn-       sentatives of the personnel. The committee held three
ing programme, an essential part of the Tapiola Group’s           meetings in 2005 to update the equality plan to meet
planning, guidance and monitoring system are annual de-           the requirements set forth in the Equality Act. There is
velopment plans for each employee and each group drawn            no system to monitor adherence to the equality plan, but
up in connection with performance reviews (LA17).                 the new Equality Act requires that the results be evalu-
                                                                  ated in the equality plan in the future. (LA10)
There is a Labour Protection Committee including seven
representatives of the employees and five representa-              The share of women in the top management of the Tapi-
tives of the employer. The labour protection delegates            ola Group is 20%, on the Boards of Directors 12% and
also participate in the meetings. There are separate del-         on the Supervisory Boards 18%. Forty-six per cent of the
egates for the head office, the sales personnel, the bank          department-level managers are women. (LA11)
personnel and the different regions. There is an elected
labour protection ombudsman for the kitchen personnel.            The opinions of the personnel are collected regularly,
The committee holds four meetings a year. (LA6)                   1–2 times a year, by means of the Status of the Team
                                                                  study. Furthermore, a biannual working atmosphere study
The Tapiola Participation Committee or TAOS is the co-            is conducted.
operation body of the entire Group. The committee han-
dles all extensive issues connected with the personnel,
with the aim of improving internal information flow and
reaching common stands.

Mean values in the Status of the Team study 2003 – 2005
                                                                      Year 2003            Year 2004           Year 2005
 Respondents                                                              1849                  2091              2149
 Support and feedback from working community                                7.9                  8.0                8.0
 Strategy                                                                     -                  8.0                8.1
 Feelings of success                                                        8.1                  8.1                8.1
 Atmosphere                                                                 8.2                  8.2                8.3
 Support and feedback from immediate supervisor                             8.2                  8.2                8.2
 Significance of own work                                                    8.5                  8.4                8.5
 Responsibility. power of decision                                          8.4                  8.4                8.5
 Utilisation of one’s abilities                                             8.3                  8.4                8.4
 Mean value for all questions                                               8.2                  8.2                8.3
 Well-being at work                                                         8.1                  8.1                8.2
 Those meeting the objective (mean value 8 or more), percentage            76.4                 77.2               78.0


                                                                                                                           Personel   33
          Incentive schemes                                              cians, for example. The occupational health care service
                                                                         also includes the services of a psychologist. Furthermore,
          Rewarding and giving recognition for success are impor-        Tapiola offers special benefits for the personnel on their
          tant means of committing and motivating the personnel.         birthdays and special work milestones.
          A profit-sharing system that increases the value of the
          personnel fund was established in the Tapiola Group in
          1991. The system rewards long-term commitment in Tapi-         Labour union activity
          ola and promotes reaching of good result objectives. The
          amount of the profit-sharing compensation depends on            Approximately 60% of the persons included in the scope
          the annual result of the Group and is at the most 3 per        of collective labour agreements are members of a labour
          cent of the annual salary. The criteria based on which the     union. Most of the insurance personnel are members of
          compensation is given are confirmed annually. In 2005,          the Union of Insurance Employees in Finland, which is
          EUR 2.6 million was transferred to the personnel fund.         a member of the Finnish Confederation of Salaried Em-
          The fund total value is EUR 19.9 million.                      ployees STTK. The bank personnel have established a la-
                                                                         bour union of their own, Tapiola Banking and Investment
          The merit pay system covers the whole organisation and         Professionals TAPSA, which is a member of the Confed-
          is a part of the management system. Its objective is to        eration of Financial Professionals RATAS.
          encourage the personnel to excel. The merit pay is max
          7% of the annual salary, and in practice the amounts           Furthermore, persons working as experts may be mem-
          paid have been on average 4%. The merit pay objectives         bers of the Finnish Association of Graduates in Economics
          are determined on the basis of the Group’s strategy, and       and Business Administration, the Association of Finnish
          they can be either team-specific or personal. The achieve-      Lawyers, the Finnish Association of Graduate Engineers,
          ment of objectives is estimated in performance review          the Finnish Association of Civil Engineers, etc. There is
          discussions. The sales personnel salary schemes include        no centralised information available for these member-
          various elements for rewarding performance, and their          ships. (LA3)
          proportion of the total salary varies from a few per cent
          to approximately fifty per cent.
                                                                         Satisfied personnel will prosper
          Tapiola’s objective of working and succeeding together is
          also reflected in the merit pay scheme for the top man-         One of the strategic objectives of the Tapiola Group is
          agement of the Tapiola Group: it is based on long-term         to retain a competent workforce who enjoys their work.
          performance. The chairpersons of the Supervisory Board         Well-being at work arises from expertise, participation
          make decisions about the salaries of the board members         and feelings of success. A high-quality labour protection
          and deputy members, merit pay rules and benefits as well        programme and occupational health care can assist in
          as issues relating to employment relationships, based on a     preventing health problems. Labour protection focuses
          proposition made by the Rewarding Committee appointed          on mental well-being.
          by the Cooperation Committee. The Boards of Directors
          make decisions about salaries, merit pay rules and other       Tapiola does not have any HIV/AIDS policies. (LA8) These
          benefits of the Managing Directors. The aids used when          policies have not been deemed necessary in companies
          defining salary levels include, for example, classification      operating in the Finnish market only. However, there are
          of tasks based on their difficulty (HAY classification) and      safety instructions for travelling personnel that are also
          salary studies based on HAY comparison data. For a sal-        given to the customer companies.
          ary summary, please see page 36.
                                                                         Tapiola Club is in charge of recreational activity for the
                                                                         personnel. Tapiola offers an annual allowance for recre-
                                        (LA12)
          Personnel benefits                                              ational activity that the Club will use in line with their
                                                                         operation plan. In the past few years, the allowance has
          In addition to the personnel fund, the Tapiola Group offers    been approximately EUR 220,000. Tapiola also sup-
          personnel other benefits. Examples of these are special         ports recreational activity for retired personnel through
          tariffs for insurance premiums, special bank accounts          Tapiola Pensioners’ Organisation. At present, there are
          and loan services, a lunch benefit, coffee and tea free of      375 members in the organisation. Annual support from
          charge as well as holiday cottages and additional pen-         Tapiola is approximately EUR 14,000.
          sion accumulation.
                                                                         Sickness leaves as percentage of the working hour objective (LA6)
          A notable benefit is occupational health care, which has                     Year                           %
          a central role in assessing the well-being of the person-
                                                                                     2001                          2.82
          nel. In addition to the health care services required by
          law, Tapiola pays for certain services of specialised physi-               2002                          3.14
                                                                                     2003                          3.35
                                                                                     2004                          3.38
                                                                                     2005                          3.78



34   Personel
    Occupational accidents occur mainly on the way                   units define for themselves the actions they will take
    to and from work                                                 to promote well-being at work in order to reach the re-
                                                                     sult objectives. The actions may be aimed at improving
    In 2005, Tapiola employees suffered 75 occupational
                                                                     working processes or working conditions, strengthening
    accidents. Forty-six of these happened when commut-
                                                                     physical or psychological resources or developing the
    ing between the home and workplace; most of them
    were caused by slipping or when bicycling. The rest              working community. For special groups, so-called Ad-
    took place either at work or on business-related trips.          ditional Vire Programmes are arranged to motivate long-
    The figures include the personnel of Tapiola Bank, the            term employees of Tapiola to develop themselves and
    data handling company Tapiola Data and the restaurant            thus enable them to continue in their work until retire-
    company Aura-Karelia. The accidents that happened at             ment age. Experiences have been excellent: productivity
    work were mainly caused by falling down or tripping, or          has improved even more than expected. In 2005, Tapiola
    as a result                                                      invested especially in improving the well-being at work
    of loosing control of a tool.                                    of the middle management.
    The number of occupational accidents has increased.
    Injuries have mainly been cuts, dislocations and                 Well-being at work and improvements are monitored an-
    fractures. The accidents caused 761 sickness leave               nually by means of the Status of the Team study where
    days compared to 326 the previous year and 667 the               the personnel evaluate their well-being at work on a scale
    year before that. Therefore, one can say that the                of 4 to 10. In 2005, the well-being at work mean value
    statistics have returned to their previous level after the       was 8.2.
    excellent year 2004.

    Occupational accidents are classified in the manner                Tapiola started internal Work Community
    required by the ESAW statistics reform of 2003. (LA5)             of the Year competition



Occupational accidents and amount of claims paid
in 2001–2005 (LA7)
80                                               128 212   140 000

70                                                         120 000
60
                                                           100 000
50
                                                           80 000
                                                                      In the competition Work Community of the Year
40
                                                                      2004, a work community whose members consider
                                                           60 000
30                                                                    the atmosphere good and its actions exemplary was
                                      53 989
                                                           40 000     sought for the first time. The applicants were
20                                                                    requested to write a description of their work
10                                                         20 000     community in the form of a story.

0                                                          0          Eight work communities participated in the competi-
        2001       2002     2003       2004       2005                tion, and the four best applications were presented to
                                                                      the Vire Executive Team. Further interviews evaluat-
                                                                      ing the operations of the team were conducted with
         Accidents, pcs        Claims paid in euros                   the two best communities. The interviews were
                                                                      conducted by Assistant Manager Silja Hyvärinen, who
                                                                      is a trained evaluator of the Excellence Finland. She
Tapiolan Vire has been registered as                                  studied, for example, team leadership, operating
a trademark                                                           principles, strategy, personnel as well as processes
                                                                      and their results. The team members were asked
The objectives of the Tapiolan Vire programme that pro-               questions such as how their supervisor has succeed-
motes well-being at work is to assist the personnel in                ed in improving the team’s work, whether a multiple
coping at work, improve their productivity as well as de-             expertise discussion has been conducted with all the
crease the number of sickness leave days and persons                  members of the team and how the team resolves
retiring prematurely. The Vire Executive Team, which al-              conflicts, for example. Based on the reports made,
                                                                      the Vire Executive Team chose to award the first prize
so includes representatives of the personnel, meets on a
                                                                      to both of the two equal competitors in April 2005
regular basis to handle the most important themes con-
nected with well-being at work. The Executive Team also               The first prize of the Work Community of the Year
selects a theme for each year. The theme of 2005 was                  2004 competition was shared by the web business
“Ethics in our operations”.                                           unit’s Net team and the Porvoo office. An honorary
                                                                      mention was given to the well-being at work services
In connection with annual planning, the departments                   of Tapiola Pension. The competition will be held
compile a Vire Plan where the teams, departments and                  annually.



                                                                                                                           Personel   35
          Top management salaries, summary 31 December 2005

          Title                     Name                 Salaries                      Merit and                                    Compensation       Pension
                                                         and other                     strategy                                     for premature      bene-
                                                         benefits                       pay 2004                                     termination of     fits****
                                                         2005*                         (EUR)**                                      employment
                                                                                                                                    relationship /
                                                                                                                                    months’ salary
          President                 Asmo Kalpala         386 274                       200 000                                      18 months          60 years
          Title                     Name                 Salaries and Merit pay        Merit pay     Strategy pay     Strategy      Compensation       Pension
                                                         other ben-   2004, %          2004 (EUR)    2002–2004, %     pay           for premature      bene-
                                                         efits 2005* (max %)***                       (max %)****      2002–2004     termination of     fits****
                                                                                                                      (EUR)         employment
          Full-time members of Boards of Directors
          Group Director            Juhani Heiskanen     206 306        15(20)         26 716        18(30)           31 774        12 months          60 years
          Group Director            Tom Liljeström       198 668        14(20)         25 065        18(30)           32 418        12 months          60 years
          Group Director            Jari Saine           199 623        15(20)         28 154        18(30)           32 571        12 months          60 years

               * Salaries and other benefits include paid salaries, excluding merit pay, as well as company car, lunch benefit and company phone. The salaries
                 of the management are based on the HAY classification and scale, which are based on benchmarking information from the financing industry.
              ** Annual objectives, spearheads and objectives for strategic period 2002–2004
             *** Annual objectives for the year in question + spearheads
             *** max % = Annual objectives for the year in question + spearheads
            **** Strategic objectives for strategic period 2002–2004
            **** max % = For strategic period 2002–2004
           ***** Pension arrangements paid by Tapiola

          Managing Directors
          Managing Director         Juha Seppänen        160 953        16(20)         22 495        18(30)           25 376        12 months          63 years
          Managing Director         Juha-Pekka           143 540        13(20)         17 284        18(30)           22 871        12 months          63 years
                                    Halmeenmäki
          Managing Director         Olli-Pekka Laine     148 492        15(20)         20 578        18(30)           23 803        12 months          63 years
          Managing Director         Harri Lauslahti      169 557        27(50)         38 919        0                0             12 months or       63 years
                                                                                                                                    6 months
                                                                                                                                    Period of notice
                                                                                                                                    + 3 months’
                                                                                                                                    monetary
                                                                                                                                    compensation
           ****     max % = For strategic period 2002–2004
          *****     Pension arrangement paid by Tapiola Tapiola Bank has a separate merit pay system based on a scorecard (Harri Lauslahti)
           ****     Strategic objectives for strategic period 2002–2004
            ***     max % = Annual objectives for the year in question + spearheads
            ***     Annual objectives for the year in question + spearheads
                    The salaries of the management are based on the HAY classification and scale, which are based on benchmarking information
                    from the financing industry.
                  * Salaries and other benefits include paid salaries, excluding merit pay, as well as company car, lunch benefit and company phone.




36   Personel
Developing expertise based on the                            based tool, presently under development and meant to
strategy                                                     support the work of supervisors. The Tapiola operating
                                                             model includes annual performance review discussions
Development of expertise is based on the business and        with all the employees.
personnel strategy of Tapiola. The development priori-
ties for the personnel are defined for each strategic pe-
                                                              “Welcome to Tapiola” course transferred to the web
riod. A model combining individual-level expertise with
the Group’s values and strategies is used in managing         As operations have developed, Tapiola’s personnel
expertise.                                                    have grown so fast that the traditional courses for
                                                              newcomers no longer fulfilled their purpose. That is
Each person is held responsible for his or her expertise      why the course was transferred to the web, where
and its development. The supervisors are in charge of man-    newcomers and also other employees of Tapiola can
                                                              independently familiarise themselves with the basic
aging learning and offering good conditions for learning
                                                              issues of Tapiola or revise their knowledge. The
by means of daily management and performance review           course offers a general view of Tapiola, the mutual
discussions. In the future, methods for learning while        operations model, Tapiola’s practices, the Tapiola
working will be developed in particular, such as job ro-      Strategy, the services offered to customers and
tation, work management, mentoring and web learning.          employment relationship issues. Furthermore, the
More than 2,400 full-time employees of Tapiola and 600        course includes a presentation of legal and safety
insurance representatives have participated in the web        issues and environmental issues.
learning programmes. Our system cannot provide a cen-
tralised view of training hours per employee. (LA9)
                                                             Library Information Service guides
In 2005, learning focused on banking, saving and invest-     to the source of knowledge
ment services, risk management and customer expertise.
We support independent studying related to the expertise     The Library Information Service is an internal service
needed in one’s tasks. A total of 682 Tapiola employees      point of Tapiola that guides the employees to the source
have taken the insurance examination. Thirty employees       of the information they need. The main objectives of the
have passed an upper-level insurance examination. Near-      operations are to promote effortless and open use of in-
ly 1,000 general examinations offered by the Marketing       formation sources and to offer the employees of Tapiola
Institute or examinations created especially for Tapiola     the information sources they need in their work.
have been taken.
                                                             The theme of 2005 in the Library Information Services
Apprenticeship training employs an examination aimed at      was improvement of electronic services in order to make
business-school graduates as well as professional exami-     all employees of Tapiola, also in the local organisation,
nations in the financing and insurance sector. At present,    equal when it comes to acquiring information. The ex-
the language training offered is specific training aiming     tensive expertise of the personnel was promoted for ex-
at improving practical language skills.                      ample by taking into use new electronic services and by
                                                             systematically developing the professional library selec-
All new employees and most employees transferring to         tion. Special attention was paid to maintaining the high
a new position inside the company are being initiated to     level of customer service. The idea is that every Library
their tasks in line with the Tapiola Initiation Model. The   Information Service customer could recommend the
newcomers become acquainted with the house and its           service to others.
habits by means of a web course, and customised train-
ing is offered to new management personnel.
                                                             Internal communication to support
The role and responsibility of supervisors in developing     effectiveness
skills and well-being will be highly stressed during this
strategy period. The priorities of leadership development    Effective internal communications ensure that everybody
are personnel management and especially management           has all operating instructions and up-to-date information
of expertise and performance. Since 2001, almost all of      at their disposal. Tapiola’s internal data network Tasku
the supervisors have received training in personnel man-     includes, for example, the Group’s operating policies and
agement skills. Supplementary business management            practical instructions, including instructions on recruiting
training is obtained through external providers. Devel-      new employees and initiating them to their work as well
opment of proximity management is supported by new           as instructions on the Vire activities. Tasku also includes
training programmes.                                         policy terms, brochures and product specifications, the
                                                             internal phonebook and training material. Furthermore,
The priorities in human resources have been personnel        Tasku is the desktop of all Tapiola employees, with con-
reporting and working hour instructions as well as a web-    nections to the purchase invoice handling software, the




                                                                                                                     Personel   37
          working hour monitoring system, the bank payment sys-        Training expenses
          tem and the web service. Tasku also offers a continuously
          updated news section and a press monitoring system. The      The training expenses include conference and course
          Tasku development project continued throughout 2005.         payments, professional magazines and literature, ex-
          The objective is to have the overhauled Tasku at the dis-    amination payments, purchasing of training materials,
          posal of employees in June 2006.                             study grants, travel expenses related to training and ex-
                                                                       ternal services used in training. We have noted that web
          Tapiola’s professional magazine Acta complements inter-      learning improves cost-efficiency and quality of training,
          nal communications and offers background information.        especially in product-related training. This shows as a
          The Group organisation with its various levels of Execu-     reduction in training expenses.
          tive Teams and meetings is also an important channel
                                                                       Training expenses, EUR
          for internal communications.
                                                                        2001         2002        2003        2004        2005
          The Strategy Communications Committee is planning and
          carrying out a Communications Programme to support the        2 219 896    2 410 006   1 790 712   1 608 332   1 902 918
          supervisors and their working communities in realising the
          policies chosen for the strategic period 2004–2006.          The figures are the total training expenses for the en-
                                                                       tire Group. We are unable to monitor training events or
                                                                       expenses at individual or personnel group level.
                                                               (EC5)
          Personnel expenses (EUR million)
           Tapiola General, Group       2003      2004      2005
           Salaries and remunerations    52.9      58.2      61.2
           Pension expenses               9.3      10.5       9.4
           Other personnel expenses       3.7       4.2       4.6
           Total                         65.9      73.0      75.2
           Tapiola Life, Group
           Salaries and remunerations    13.1      12.6      12.5
           Pension expenses               2.9       2.3       2.4
           Other personnel expenses       0.8       0.8       0.8
           Total                         16.9      15.6      15.7
           Tapiola Pension, Group
           Salaries and remunerations    11.0      12.9      13.7
           Pension expenses               2.6       2.4       2.7
           Other personnel expenses       0.8       0.8       0.9
                                                                       The Tapiola General Group figures also include the per-
           Total                         14.4      16.2      17.3      sonnel of Tapiola Bank Ltd. The figures are audited.




           Tapiola readiness course as national defence course

           In the autumn, for the first time, the Tapiola Group          The Tapiola Group companies have been classified
           arranged a readiness course for exceptional condi-           as important companies that are expected to
           tions in the form of a national defence course. The          continue to operate also in exceptional circumstanc-
           course was arranged for the personnel of the head            es. That is why employees crucial to the operations
           office reserved for the needs of the Tapiola Group            of Tapiola who are also persons liable for military
           in exceptional conditions, or the so-called VAP              service may be exempted from military service and
           reserved personnel. The practical arrangements were          used by the company instead. A VAP reserve status
           taken care of by Tapiola Safety Management and               is applied for personnel who are deemed essential
           the Tapiola Club National Defence Department.                for operations in exceptional circumstances. In
                                                                        Tapiola, there are approximately 50 such persons.
           “Securing operations in exceptional circumstances            The exemption is granted by the Military County
           and maintaining readiness is part of the social              Staff.
           responsibility of Tapiola, and customers and authori-
           ties expect it of us,” stated Managing Director
           Juha Seppänen in the event’s opening speech.




38   Personel
                                 We Bear Our Responsibility for
                                 Customers and to Customers

The vision of Tapiola as a mutual company is to take care           Insurance Supervisory Authority, which aims to ensure
of our customers so actively and responsibly that they              stable operations of insurance and pension companies
will recommend us to others.                                        and maintain trust in the insurance sector. In the bank-
                                                                    ing sector, the Finnish Financial Supervision Authority
At Tapiola, customers will receive all the insurance, sav-          aims at keeping the financing market stable and main-
ings and investment services they need under the same               taining trust in the operations of the market. The super-
roof. Private customers will also receive banking services.         vising bodies work for the benefit of the users of insur-
Product and service development is based on studies of              ance, banking and investment services.
the needs of the customers. Care has a central role in the
services offered to private customers. It improves consum-                       Tapiola is a member of the Association for
ers’ knowledge of their risk level and insurance cover as                        Finnish Work and has the right to use the Key
well as of the development of their savings and finances                          Flag logo to show that the services of Tapiola
as a whole. Managing one’s personal finances is a neces-                          are Finnish. (PR6)
sary basic skill and part of one’s life management.

We have compiled internal instructions and operating
models to maintain the steady quality of our services               Development of number of customers
and fair treatment of our customers. Supervisors are in
charge of monitoring that the instructions are followed.            The number of private household customers keeps on
The privacy protection of customers has been secured by             growing: at the end of 2005, there were almost 812,000
means of information security instructions, and we also             such customers. Private household customers include
monitor compliance with these instructions. (PR3) Bank-             households, farms and entrepreneurs. At the year-end,
ing operations on the Internet are also subject to secu-            there were almost 32,000 corporate and community cus-
rity requirements.                                                  tomers. The number of mutual fund unit owners and the
                                                                    amount of fund capital continued to grow. Fund capital
 Objectives and results 2005: Customer                              increased by 33 per cent to EUR 974 million. At the end
 Outline of requirements in customer service situations:            of 2005, the number of mutual fund unit owners was
 Objective 30,000, actual number 22,500.                            15,067, showing a handsome increase of 48 per cent.
                                                                    At the end of 2005, the bank had 48,700 customers.
 Companies’ willingness to recommend Tapiola to others: Objective
 more than 19%, actual percentage 14%.
 Objectives 2006: Customer                                          Service for the needs of the
 Bank reputation: Objective 60%.                                    customers        (2.7)


 Willingness to recommend: Objective 55%.
                                                                    Tapiola offers private household customers – households,
The monitored areas in the Tapiola scorecard are customers,         entrepreneurs and farms – versatile insurance and financ-
personnel, finances and market position as well as processes.
Above is a description of the objectives set and their realisa-
                                                                    ing services. (2.2.) In addition to household insurance and
tion in 2005 as well as the objectives for 2006.                    farm insurance as well as other forms of property insur-
                                                                    ance, the company offers insurance for health and life
In the insurance and financing sector, products and ser-             risks. For saving and investment, we offer life insurance,
vices may influence the health and safety of a customer              individual pension insurance and funds as well as asset
especially when a customer makes a saving or invest-                management services. The banking services offered to
ment decision that is contrary to his or her needs due to           private households include daily banking services as well
misleading information. (PR1) No misconduct of this kind            as saving and investment solutions. In addition to insur-
has occurred, nor has Tapiola received any warnings. (PR4-          ance and banking services, Tapiola offers review of cov-
5)
   Section 9 of the Insurance Contracts Act states that             erage where customers are able to regularly examine the
the valid content of an insurance contract is the content           adequacy of their insurance coverage and check that their
understood by the policyholder based on the informa-                solutions are up-to-date with the help of an expert.
tion received. The insurance sector is monitored by the




                                                                                                                          Customers   39
         During the year 2006, Tapiola became the market leader                  Handling times for household claims have been cut by
         in farm insurance. Forty-four per cent of all Finnish farms             approximately 10 per cent, while the handling of corpo-
         have chosen Tapiola as their primary insurance company,                 rate claims is up to a third faster than before. Only one
         and Tapiola has a customer relationship with 67% of all                 out of six decisions on claims is handled for more than
         farms. During the past three years, the market share has                a week. For example, as many as 12,000 household in-
         increased by five percentage units. In addition to farm                  surance claims are handled by phone every month. Less
         insurance, Tapiola is a prominent market leader also in                 than a fifth of the claims are handled using traditional
         other insurance types for farms: the company has a share                written notifications of claim. The regional claims advi-
         of more than 50% in voluntary farm pension insurance                    sor network covering the entire country, together with the
         (54%), life insurance savings policies (51%) and forest                 loss assessors, takes care of most of the notifications of
         insurance (51%). This information is based on a study on                claims requiring an inspection.
         farm insurance conducted by TNS Gallup. When studying
         the various regions, the best market shares are in North-               All of the products and services of the Tapiola Group are
         ern Finland (51%), Eastern Finland (49%) and South-                     marketed under the joint Tapiola brand. The only sepa-
         Eastern Finland (48%).                                                  rate products are Omaeläke Private Pension, Omavara
                                                                                 Life Insurance, Oma Web Service as well as the Agro and
         For companies, Tapiola offers a comprehensive risk man-                 Agria products for farms.
         agement service, including risk appraisal, risk manage-
         ment consulting, property and business insurances tak-
         en to cover risks, statutory and voluntary personnel risk               New products and services 2005
         insurance, as well as financing and investment services
         and services connected with well-being at work for the                  In accordance with the care model implemented by the
         personnel of Employees Pensions Act (TEL) customers.                    life insurance companies, customers are contacted by
                                                                                 phone before being sent a negative decision on a claim.
         A claims service model based on the telephone service                   Negative decisions are made in approximately three per
         started in 1998 has now been expanded to cover all of                   cent of the cases. The customers have given positive
         Finland. Since October 2005, claims customers in almost                 feedback on this active care model.
         all insurance categories have been able to start the han-
         dling of their claim by making a single phone call. Only                An insurance policy for grave illness was developed in
         claims issues connected with life insurance and medi-                   Tapiola Life based on the clear need expressed by cus-
         cal expenses insurance should be taken care of on the                   tomers. The Omavara Grave Sickness Insurance covers
         Internet or in an office.                                                illnesses and accidents that cause high costs. The in-
                                                                                 surance covers doctor’s fees, hospital charges and medi-
                                                                                 cal expenses. It will be applied when the costs due to an
           Objectives and results 2005: Processes                                illness become high and risk causing financial problems
           Quality of claims service to motor vehicle insurance customers:       for the customers. The deductible is EUR 1,000.
           Objective: Share of commendable evaluations 55%,
           realised share 55%.                                                   The vehicle salvage benefit is supplementary coverage
           Quality of claims service for household insurance customers:          related to the Tapiola motor vehicle insurance that was
           Objective: Share of commendable evaluations 55%,                      taken into use in the autumn of 2005. The coverage is
           realised share 55%.                                                   automatically included in all new motor vehicle insur-
           Share of pension savings package out of the number of                 ance contracts and can easily be added to old ones. The
           new pension insurances: Objective 25%, actual ratio 10%.              supplementary coverage became popular immediately:
                                                                                 as many as 27,000 vehicle salvage benefits were sold
           Objectives 2006: Processes
                                                                                 in three months.
           Cooperation:
           Objective: Success of further planning in the corporate segment       The most recent funds in the Tapiola mutual fund family
           (an indicator will be created in the spring).                         were evaluated by the international company Morningstar
           Basket level for corporate customers: Objective +1 percentage unit.   in May. Tapiola Institution and Tapiola Wellbeing were
                                                                                 upgraded to the five-star category, and the first stars were
         The monitored areas in the Tapiola scorecard are customers,             awarded to the USA and the Emerging Markets (four stars)
         personnel, finances and market position as well as processes.
                                                                                 funds and to the High Yield (three stars) funds.
         Above is a description of the objectives set and their realisa-
         tion in 2005 as well as the objectives for 2006.
                                                                                 Finnish Loss Survey SVT Ltd, which inspects the motor
                                                                                 vehicle damage of all Tapiola customers, has started a
         At the turn of the year, already 85 per cent of house-                  new service: reconstruction calculation connected with
         hold claims and 60 per cent of corporate claims were                    the analysis of traffic accidents. This can be of help in
         notified by phone. This has also speeded up operations.                  accident investigations. The programme can be used to




40   Customers
calculate accidents involving two or more vehicles, fall-     Furthermore, Tapiola employs local risk management engi-
ing over, driving off the road or movements of passengers     neers who assist our customers locally throughout Finland.
or cargo during an accident. The service will have nota-      In case of damage, the customers have the entire Tapiola
ble impacts on the legal protection of individual claims      loss assessment service at their disposal. Our loss asses-
customers. In situations where it has not before been         sor network covers all of Finland and works in close coop-
possible to prove the excess speed of one of the parties,     eration with the claims service. When taking care of and
the person required to give way was often deemed solely       correcting damage, we use materials and working methods
guilty in crossing accidents, for example. Now, excess        that take into account sustainable development.
speed can be proven with great certainty.
                                                              In 2005, asset and operative risk management projects
                                                              were conducted to develop methods supporting risk se-
 Rewarding years of work after the age of 55                  lection and assessment and to employ new methods that
                                                              offer our customers even better service tailored to their
 Tapiola Pension’s well-being at work services                individual needs. Some of our customer companies have
 department conducted a study among employees
                                                              participated in the development work in order to secure a
 45–55 years of age as to what are the most impor-
 tant issues keeping them at work and what are the            customer-oriented viewpoint. Comprehensive enterprise
 issues that make them want to retire. The study              risk management (ERM) was established as a method for
 showed what the company can do to keep employ-               conducting large-scale risk assessments with the largest
 ees happy until the end of their working career and          customers. During the year, many risk assessments were
 what is required from the supervisors.                       conducted with major clients and SME customers. The
                                                              claims handling service was developed by establishing
 The employees deemed feedback and acknowledge-               partnerships with the parties whose cooperation is re-
 ment from their supervisors extremely important. All
                                                              quired in case of damage.
 in all, it seems that long-term humane management
 is of utmost importance. If profitability alone is
 emphasised, working life becomes too stressful.
 Management should also be able to build a feeling            International services
 of permanence and show appreciation.
                                                              Tapiola can grant insurance in any EEA country, as long
 The results of the study will be used to develop the         as the insurance premium tax is paid to the country in
 Tapiola Pension well-being at work services.                 which the risk is located. In practice, however, Tapiola
                                                              cooperates with local insurance companies to insure
                                                              risks outside Finland so that the local company will take
Risk management services                                      of the insurance and reinsure the risk with Tapiola. This
                                                              way, the operations will be in line with the local legisla-
Tapiola offers corporate customers jointly defined and         tion in each country.
planned risk management and claims handling services.
The objective of systematic risk management based on          Tapiola’s emergency service on weekdays from 8 p.m. to
the mapping of risks for each customer is to secure the       8 a.m. and on weekends and bank holidays is taken care
undisturbed continuity of business operations. At the         of by the emergency centre of Auria Ltd. The emergency
same time, expenses arising from any realisation of the       centre also takes care of the emergency service of Au-
risks will be minimised. By mapping risks together with       tomobile and Touring Club of Finland. In the past few
customers, the most important risks of each business can      years, 60% of the emergency calls to Tapiola have been
be studied. The mapping also includes an evaluation of        made because of vehicle damages.
which risks should be managed with Tapiola’s services and
which need a different type of management solution.           In 2005, a total of 843 accidents occurred abroad to cus-
                                                              tomers of Tapiola. Most of the accidents were minor car
By means of systematic and long-term risk management,         accidents, and the customers were able to return to Fin-
a company can reduce or even eliminate the detected           land with the vehicle. There were also a couple of dozen
risks. Tapiola assists the customers in this by placing its   minor thefts. Actual assistance was needed in approxi-
risk management and insurance expertise at their dis-         mately 40 cases. In 2005, Tapiola took care of 52 cases
posal. We employ risk managers with special expertise         for the partnership companies where a Finn had suffered
in fire safety, safety of business premises regarding bur-     a loss abroad. Customers of Tapiola caused 200 cases
glary, locking and other theft cover, faults in construc-     of damage in Sweden. Tapiola’s partnership company
tion, industrial safety, liability and agreement risks con-   Länsförsäkringar took care of these cases.
nected with business operations, product liability and le-
gal risks, risks due to termination of business operations
and information security.




                                                                                                                   Customers   41
                                                                          Research and
                                                                        Customer Surveys

         By means of our centralised customer and market research                                     Customer satisfaction studied
         activity, we are able to learn more about the expectations                                   in all customer segments (PR8)
         of our customers and anticipate the market trends bet-
                                                                                                      In 2005, approximately 20 brand, service image
         ter. We conduct surveys to monitor the satisfaction of
                                                                                                      and other customer and market studies were con-
         our various customer groups as regards our operations,                                       ducted within the Tapiola Group to study the
         services and products.                                                                       impressions and satisfaction of Tapiola’s customers
                                                                                                      regarding Tapiola’s services, and the opinions of the
         Annually, we monitor the number of customers planning                                        customers of our competitors regarding these
         to take their business to another insurance company. This                                    companies. The studies were conducted in five
         research offers useful comparison data also on our com-                                      different customers segments: households, entrepre-
         petitors’ customers. We have monitored these events since                                    neurs, farmers, SMEs and large companies.
         1996. During the entire time, the customers of Tapiola
                                                                                                      Furthermore, almost 30 service experience surveys
         have been the second most loyal. In 2005, only 7 per                                         were conducted in 2005 to chart the experiences
         cent of the household customers who participated in the                                      of Tapiola’s customers regarding efficiency of the
         survey had considered leaving Tapiola, compared to every                                     insurance service and claims services and quality
         fourth or fifth customer of our major competitors.                                            of the phone services, for example.

         Since 2002, we have also monitored how well we are                                           Tapiola’s customers are satisfied
         reaching our vision, i.e., willingness of our customers to
                                                                                                      In 2005, 7% of the household customers of Tapiola
         recommend Tapiola to their friends. In 2005 as many as                                       were considering switching to another insurance
         51% of the persons participating in the survey said they                                     company. The willingness is at the average level for
         could recommend Tapiola. The level of recommendation                                         banks but clearly lower than that of the customers
         has always remained at a higher level than that of the                                       of other insurance companies.
         competitors, except for one group of companies.
                                                                                                      Tapiola’s corporate customers are considering
          % Willingness to recommend, households                                                      switching to some other insurance company more
         100                                                                                          often than household customers; the willingness to
              83                                                                                      switch in 2005 was 14%. This number was, howev-
          80                                                                                          er, the lowest for all the insurance companies.
          60                          52                                               51
                                                      45              49                              The satisfaction of Tapiola’s customers can also be
          40                                                                                          seen in the fact that approximately half of both
                                                                                                      household and corporate customers could recom-
          20
                                                                                                      mend Tapiola to their friends.
           0
                    2001             2002            2003            2004             2005           %        Willingness to switch, households
          % Willingness to recommend, companies
            No study was conducted in 2004.
                                                                                                     20
         100                                                                                         15
                     81                                                                                           10               10              10     9
          80                                                                                         10                                                          7
                                      58              59
          60                                                                           47            5
          40                                                                                         0
                                                                                                                 2001             2002            2003   2004   2005
          20
           0                                                                                         %        Willingness to switch, companies
                    2001             2002            2003            2004             2005           30
               Since 2001, customers’ willingness to recommend Tapiola as an insurance company and                                 17             19
               since 2002 their willingness to recommend Tapiola as a financial company have been     20                                                         14
               studied, so the results are not comparable in this respect.                                        9
                                                                                                     10
         These research results were taken from brand and service                                     0
         image studies ordered by the Tapiola Group from Otan-                                                  2001              2002            2003   2004   2005
         tatutkimus Oy at the end of 2005.                                                                No information is available for 2004.




42   Customers
                               Marketing Communications
                                Is Relevant and Ethical

The advertising, direct marketing and web communica-          important insurance products, and by developing the ser-
tions of Tapiola comply with high ethics standards. (PR9)     vice process documentation.
At Tapiola, the truthfulness of messages is not the only
criteria for advertising content. We always choose issues     The Tapiola Group publishes two customer magazines,
relevant to our customers and potential customers and         both of which appear twice a year. In 2005, the Oma-
focus, for example, only on benefits and arguments that        talous magazine was delivered to approximately 410,000
are important for our customers. In 2005, Tapiola did         private households that are loyal customers of Tapiola.
not violate any advertising and marketing regulations, in-    The Yritystalous magazine was delivered to approximately
structions or recommendations, neither did we receive any     35,000 corporate customers and also to potential cus-
notifications about our marketing actions from banking,        tomers and stakeholders. The Omatalous magazine of-
insurance, consumer protection or other authorities. (PR10)   fers tips for managing one’s personal finances and tries
                                                              to present complex financing services in a simple man-
For the third time in a row, Tapiola was chosen as the most   ner. The Yritystalous magazine presents new operating
trustworthy insurance company in the Trusted Brand Sur-       methods to corporate decision-makers and tells about
vey conducted by Reader’s Digest in 2005. The survey          trends in risk management, for example.
studied what brands Finns consider the most trustworthy
in 36 product categories. The study was conducted in 14
countries. In Finland, there were more than 1,600 respon-     Customer benefit policy
dents, which is a representative sample of all Finns. The
criteria for trustworthiness were: quality, advantageous      Tapiola’s owner-customer benefits make sense from the
price, strong product image and understanding the needs       customer’s point of view: they are not just bulk discounts
of consumers. As a newcomer, Tapiola Bank did not yet         but also reward the customer for carefulness and loy-
receive visibility in the bank category.                      alty, for example. Tapiola’s customer benefit policy was
                                                              reformed in 2005. In the new policy, the customer ben-
The web pages of Tapiola were successful in the annual        efits are based on mutuality, where financial benefits
study of the Tietoviikko magazine, where the web pages        are complemented by various service benefits, and on
of the 250 biggest Finnish companies were studied. The        loyalty, permanence and partnership. Furthermore, ze-
criteria used were company information, product informa-      ro occurrence of damage and good profitability, such as
tion, customer service, navigation, usability and orienta-    voluntary damage prevention actions and care, are also
tion. The Tapiola web pages were the fourth best. In web      taken into account.
page performance, we were in second place.

                                                              Share of customers in the profit 2005
Communications to customers
                                                              The profits from the operations of the Tapiola Group are
Many financing sector services involve significant com-         used for customer bonuses and for developing products
munication responsibilities for the companies, which is       and services that benefit customers, and they are also used
why consumers may feel that they are being inundated          to strengthen the company’s solvency, required to main-
with information. We do our best so that this amount of       tain the company’s risk-carrying capacity. The amount of
information and the related accuracy requirements would       discounts and no-claims bonuses paid was EUR 104.7
not prevent customers from understanding the informa-         million, over EUR 16 million more than the year before.
tion they receive. (PR2) We are currently compiling a cus-
tomer relationship communications policy and starting an       Benefits to owner-customers (EUR million)    2005   2004
extensive development programme based on this policy.          Discounts to owner-customers                77.0   66.2
                                                               - Tapiola General                           39.3   35.1
The most important objective of the programme is mak-
                                                               - Tapiola Life                              16.7   15.1
ing communication interactive so that it assists the cus-                                                  21.0   16.0
                                                               - Tapiola Pension
tomers in the handling of their business.                      Loyalty discounts and similar               13.6   10.0
                                                               Service benefits                              0.9    0.9
Tapiola has improved the accuracy of customer informa-         Benefits paid to the customers
                                                                                                           13.2   11.1
tion by offering training to the agents, compiling product     via cooperation partners
specifications that explain the policy terms of the most        Benefits to owner-customers total           104.7   88.2




                                                                                                                   Customers   43
                                            Saving Natural Resources
                                              is Part of Daily Work

         For Tapiola, environmental responsibility means effective          Participation in supporting a project for the protection
         and economical use of natural resources, risk manage-              of Lake Matalajärvi in Espoo shows Tapiola’s willingness
         ment and taking into account environmental issues in               to bear its responsibility for the environment. The proj-
         our daily operations and decision-making. The financial             ect is supervised by the Environmental Centre of Uusi-
         sector is based on office work and is thus not a signifi-            maa, and its objective is to protect Lake Matalajärvi and
         cant polluter of the environment. Therefore, indirect im-          restore it for recreational use. The lake belongs to the
         pacts have more significance than direct environmental              Natura 2000 environmental protection network.
         effects, such as taking care of the company’s real estate
         assets in an environmentally friendly manner, adher-
         ing to responsible investment principles and preventing            Tapiola’s environmental objectives
         environmental damage.                                              2004–2006
         Tapiola promotes an environmentally friendly approach
         among the clientele by offering damage prevention and              Customers
         environmental insurance services. About a dozen envi-              Environmental services to match
         ronmental risk surveys are conducted for corporate cus-            the needs of customers.
         tomers every year, and companies can also expand their
                                                                            Processes, quality and efficiency
         coverage with voluntary environmental insurance. Private
         households and farmers receive environmental advice                1. Reduced environmental impacts due to real
         mainly in writing. The specialised fund Tapiola Wellbe-               estate owned by company and to offices
         ing invests globally in sectors promoting the well-being of        2. Investment activity taking into account
         people and the environment. The investments of the fund               environmental values
         focus on health care and environmental care technology
         as well as on companies offering leisure products.                 3. Environmental viewpoint taken into
                                                                               account in processes
         The environmental awareness of Tapiola’s employees is              Personnel
         systematically promoted by training and communica-
                                                                            1. Competent and expert personnel
         tions. Furthermore, all new employees are given a crash
         course in environmental issues as part of the “Welcome             2. Functional and interactive
         to Tapiola” course, and supplementary operating instruc-              environmental communications
         tions are issued. There is a separate section for environ-
         mental activities in the Group’s internal communications           Economy and market position
         network, Ympäristö-Tasku.                                          1. Forerunner’s position in environmental responsibil-
                                                                               ity discussion regarding the insurance and financ-
                                                                               ing sector
                                                                            2. Managing and monitoring environmental expenses

                                                                            Tapiola’s Environmental Policy was updated and approved
                                                                            by Group’s Boards of Directors in summer 2005.


                                                                             Tapiola Environmental Policy 2005
                                                                             Responsible management of environmental issues
                                                                             refers to ethical and professional activity in line with
                                                                             our values. For us, environmental responsibility
                                                                             means effective and economical use of natural
                                                                             resources, risk management and taking into account
                                                                             environmental issues in our daily operations and
                                                                             decision-making.
         Internal inspectors Marko Tolonen (left) and Eija Mali studying
         the Lake Matalajärvi protection plans presented by Licentiate in
         Philosophy Jack Barckman.




44   Environment
 Through our environmental activities we can partici-
 pate in promoting sustainable development for a
 safe, healthy and clean living environment. We
 require that all employees of Tapiola take environ-
 mental issues into account in their work and partici-        Green Office
 pate in continuous improvement of our operations             system and logo
 according to our environmental objectives.
                                                              In April, Tapiola also joined the Green Office Environ-
 Our objective is to display exemplary activity and           mental System of the World Wildlife Fund WWF. Tapiola’s
 professionalism in environmental issues.                     head office operations were included in the scope of the
 In order to achieve this, we will                            system. WWF audited the Environmental Programme of
                                                              the head office in August 2005 and granted the right to
 • systematically and purposefully develop                    use the Green Office logo. (PR6)
   the environmental operations of Tapiola;
 • take care of our personnel’s expertise in environ-         Green Office is different from other environmental sys-
   mental issues and promote environmental aware-             tems in that it has built-in networking with other Green
   ness in the Environmental Team;                            Offices. Internal comparison within the network enables
                                                              the spread of good practices and improves management
 • reduce the environmental impacts of our opera-
                                                              of environmental impacts. At the same time, Tapiola
   tions in our working environment and when
   managing our real estate assets;                           formed a long-term partnership with the WWF.

 • evaluate investment targets also based on how well         Green Office motivates the personnel to do good ecological
   they take into account environmental principles;           deeds in their everyday life and raises their environmen-
 • actively promote the environmental safety of our           tal awareness. The environmental tips shared through the
   customers by means of damage prevention and                network support the training offered to the personnel.
   environmental insurance services as well as offer
   investment targets where environmental issues              At the same time, Tapiola chose to end its membership
   are taken into account;                                    in the UNEP Environmental Commitment for the Insur-
 • participate in discussions on environmental                ance Industry because Tapiola felt that the benefits of
   responsibility in the insurance and financing               the programme in its new form did not match the costs
   business and outside our sector.                           of the programme.


Tapiola committed to Sustainable
                                                               Tapiola’s environmental themes
Development Charter                                            for Energy Savings Week
In April, Tapiola committed itself to the Business Char-       In the autumn of 2005, Tapiola participated once
ter for Sustainable Development. The charter is an in-         again in the Energy Savings Week arranged by
ternational, voluntary code of conduct with environmen-        Motiva. During the week, information on the subject
tal leadership principles at its core. The International       was offered every day in Tapiola’s internal data
Chamber of Commerce ICC published the principles for           network, and an Energy Expert enquiry was arranged
the first time in 1991. Thousands of companies have             for the personnel. Prizes were raffled among the
joined the charter, approximately 60 of them Finnish           participants. Furthermore, the Tapiola Environmen-
                                                               tal Team arranged a daily changing exhibition at the
organisations.
                                                               head office, where the latest environmental themes
                                                               were presented. The themes included introduction
The central principles of the Business Charter are, for ex-    of the Green Office System, environmental issues
ample, that operations be continuously developed, com-         in real estate operations, sorting of waste, energy-
munication regarding environmental issues be open and          efficient use of IT equipment and participation
employees be trained in a responsible manner. Further-         of Tapiola in the rehabilitation of Lake Matalajärvi
more, environmental impacts must be taken into account         in Espoo.
in product development, customers must be advised on
how to operate safely, there must be cooperation with
stakeholders and regular environmental reports must be
prepared. It is also important to prevent environmental
damage and use energy and raw materials in an effective
manner in order to lessen waste production and handle
waste management safely. In other words, the organisa-
tions should mainstream the environmental perspective
in all their business operations.




                                                                                                               Environment   45
                                              Real Estate Operations
                                            Environmental Key Figures

         In 2005, the value of the real estate owned by Tapiola to-         Less than a half of Tapiola’s real estate assets are in-
         talled approximately EUR 1.5 billion, with a surface area          cluded in the scope of the KuluNet monitoring system.
         of about 983,000 m2. When calculated based on cubic                Comparable reductions in the consumption of heat, elec-
         content, approximately 30% of the real estate property             tricity and water for these properties were 5.8%, 0.2%
         is included in the scope of the real estate and construc-          and 16.3%, respectively.
         tion industry energy savings contract KRESS.

         Approximately half of the Tapiola properties are included          kWh/m 3 Normalised consumption of heat for the real estate
         in the scope of the consumption monitoring system Ku-              39
         luNet, and all of the KRESS properties are being moni-             38
         tored with the KuluNet system. Below are comments on                                                 38.0
                                                                            37   37.5
         the results for those KuluNet properties for which com-
         parable consumption monitoring data for 2001–2005                  36                                                35.5
                                                                                               36.0
         is available.
                                                                            35                                                                35.3
                                                                                                                     34.9
         The normalised heat consumption for the KRESS proper-              34
                                                                                        34.0
         ties, a total of 43.7 GWh (heat consumption 39.5 GWh),             33
         has decreased by altogether 5.8% between 2001 and                                            32.5
                                                                            32                                                       32.4            32.2
         2005. The decrease in specific heat consumption of 10%
         set forth in the KRESS contract could not be reached.              31
         However, the decrease in the specific heat consumption
                                                                            30
         of the comparable Tapiola real estate portfolio – 5.2%                    2001           2002            2003             2004          2005
         from the year 2001 to the year 2004 – was notably bet-
         ter than the decrease in private sector specific consump-                 All real estate included in the KuluNet system      KRESS real estate
         tion (2.4%) stated in the Annual KRESS Report for 2004
         published in 2005.                                                 Including information for 56 properties, of which 29 are
                                                                            included in the KRESS contract. The share of this real estate
                                                                            in all Tapiola real estate (m3) is 44% (KRESS real estate
         The electricity consumption of the KRESS properties, a             33%). The average heat consumption for similar real estate is
         total of 26.1 GWh, has decreased by 1.5% during the                24–47 kWh/m3 (KRESS real estate 20–44 kWh/m3).
         same period of time, and water consumption, a total of
         87,400 m3, by an excellent 21.2%. As regards electricity,
         the objective of the KRESS contract is to decrease the
         consumption level. The Tapiola Group had set 10% as the
         five-year reduction objective for water consumption.




         Environmental key figures for KRESS and KuluNet-monitored real estate                                                                   (EN3, EN5)




                              Real estate    Properties,                                                                                      Change
                                                           Cubic content, m3       2003               2004               2005
                              portfolio      pcs                                                                                            2001–2005
                              KRESS          29                 1 356 631         46 047            40 798              39 492                  -0.7%
           Heat, MWh
                              KuluNet        56                 1 810 345         68 730            64 245              63 947                  -0.8%
                              KRESS          29                 1 356 631         47 338            43 906              43 663                  -5.4%
           Norm. heat, MWh
                              KuluNet        56                 1 810 345         68 730            64 245              63 947                  -5.8%
                              KRESS          25                 1 144 396         23 127            22 822              23 154                  -1.5%
           Electricity, MWh
                              KuluNet        52                 1 590 610         26 611            26 386              26 848                  -0.2%
                              KRESS          28                 1 244 611         95 134            88 503              87 384                 -21.2%
           Water, m3
                              KuluNet        56                 1 695 538        239 908           226 337             219 252                 -16.3%




46   Environment
kWh/m 3      Consumption of electricity                                           l/m 3   Consumption of water
22
                                                                                  160
20            20.5                                                                        155
                              20.1            20.2           19.9          20.2   140                   146            141
18                                                                                                                                     133           129
                                                                                  120
16    16.9             16.8            16.7           16.6          16.9
                                                                                  100
14
                                                                                   80           89
12                                                                                                             79             76
                                                                                   60                                                         71            70
10
                                                                                   40
          2001            2002            2003             2004        2005
                                                                                   20
          All real estate included in the KuluNet system     KRESS real estate
                                                                                    0
Including 52 properties, of which 25 are included in the                                   2001           2002            2003              2004        2005
KRESS contract. The share of this real estate in all Tapio-
la’s real estate (m3) is 39% (KRESS real estate 28%). The                                  All real estate included in the KuluNet system      KRESS real estate
average consumption of electricity for similar real estate is
8–40 kWh/m3 (KRESS real estate 10–46 kWh/m3). The con-                            Including 56 properties, of which 28 are included in the
sumption of electricity in some of the KRESS properties is                        KRESS contract. The share of this real estate in all Tapiola’s
monitored through a transformer, which makes the consump-                         real estate (m3) is 41% (KRESS real estate 30%). The av-
tion higher than the consumption in normal real estate.                           erage consumption of water for similar real estate is
                                                                                  112–242 l/m3 (KRESS real estate 68–187 l/m3).

New environmental programme for
real estate operations planned                                                    The following objectives were set forth
                                                                                  in the programme:
The Tapiola Real Estate Environmental Programme has                               • Reducing heat energy and water consumption
been in use for three years. In 2005, the programme was
                                                                                  • Managing consumption of electricity
updated and new objectives created under the heading
“Office and Business Construction Environmental and Life                           • Making waste management more efficient
Cycle Objectives 2005–2008”. The purpose of the pro-                              • Managing environmental risks
gramme is to direct the operations so that environmental                          • Learning about the needs of our customers in
issues will be a priority also when planning new buildings                          environmental issues.
in which the Tapiola Group is an investor or when making
repairs in real estate owned by the Tapiola Group.                                More specific objectives, measures and indicators will be
                                                                                  set for each of these objectives.
At the year-end, a draft for a new environmental programme
for 2006–2008 was prepared. The programme includes                                Furthermore, the Real Estate Unit’s instructions for plan-
identification of the environmental impacts caused by land                         ning construction and maintenance services have been
use, the environmental load of building parts as well as the                      updated as regards environmental instructions for archi-
environmental impacts during use arising from buildings’                          tects. The architects are required to calculate, for ex-
and their users’ energy and water consumption and waste                           ample, heat and electricity consumption already in the
generation.                                                                       sketch designing phase.


Piloting sites for the PromisE environmental classifica-                           Many contractors have already included recycling and
tion system during 2005 have been the Finnforest Mod-                             sorting of waste in their worksite waste management
ular Office built in Espoo (photo) and a logistics centre                          policy. Our partners have environmental programmes of
under construction in Vantaa. In the PromisE classifica-                           their own and persons in charge of environmental issues,
tion, the biggest environmental impacts of a real estate                          which means that the worksites of many of the contrac-
are evaluated according to the main categories in the                             tors comply with good environmental values.
classification system, which are the health of the users,
consumption of natural resources, environmental impacts
and environmental risks.

An example is district cooling taken into use in some of
the Tapiola Group’s properties: this method of cooling
can reduce environmental noise and the use of agents
detrimental to the ozone layer. Furthermore, general
working site instructions have been applied in sites un-
der renovation.




                                                                                                                                                      Environment   47
                                   Information about Atmospheric
                                Emissions Available for the First Time                                                                          (EN8)




         Most of the atmospheric emissions of the Tapiola Group                   commuting between the home and the office caused CO2
         are caused by production of electricity and heat energy                  emissions of approximately 1,290 tons in 2005. At pres-
         for the real estate owned by the Group. The most impor-                  ent, the travelling monitoring system used by the Tapi-
         tant source of atmospheric emissions in the Group’s own                  ola Group does not enable monitoring of carbon dioxide
         operations is business travel.                                           emissions caused by other means of transport.

         The carbon dioxide emissions of the KRESS and Kulu-
         Net properties presented above have been evaluated by                    CO2 emissions from real estate included in KuluNet
         using a climate calculator created by TKK Dipoli, WWF                    monitoring system
         Finland and Motiva Oy. It is also used in the Green Of-                  Thousand tons, CO2
         fice reporting on the operations of the Tapiola Group’s                   25 000
         head office. When evaluating the emissions of the KRESS
         and KuluNet properties, the average CO2 emissions pro-                   20 000                                  20 069            20 855
                                                                                                        19 944                                                19 797            19 822
         file for Finnish electricity and district heating production              15 000
                                                                                                                                   15 032
                                                                                               14 585            14 299                              13 785            13 556
         has been used. The energy production emissions of the                    10 000
         Tapiola Group’s head office have been evaluated by us-
         ing information received from the producers of electric-                   5000
         ity and district heating.                                                       0
                                                                                                   2001             2002              2003               2004             2005
         In 2005, the CO2 emissions of all the Tapiola properties                                 KRESS real estate
         included in the KuluNet monitoring system were 19,822
                                                                                                  All real estate included in the KuluNet system
         tons. Seventy-three per cent of the emissions were caused
         by heat consumption and the rest by the use of real es-                  A more extensive carbon dioxide emission profile has been
         tate electricity.                                                        compiled for the head office operations as a part of the Green
                                                                                  Office system reporting. In 2005, the carbon dioxide emis-
                                                                                  sions totalled 6,513 tons.

         Environmental impacts of travelling
         Business travel expenses for the Tapiola Group in 2005
         were EUR 3.7 million, of which a little over half, or EUR
         1.9 million, were caused by car use. Driving and the use
         of company cars in the entire Group caused carbon diox-
         ide emissions of 1,110 tons. The amount has decreased
         by 3.4% when compared to 2004. It was estimated that




         Environmental operation development stages                                                                                            5. Future of environmental
                                                                                                                                                  operations 2007

                                                                                                       4. Developing social
                                                                                                          responsibility 2004–2006

                                                                   3. Developing external
                                                                      environmental work 2002–2004

                                       2. Establishing internal                                                                                   VISION:
                                          environmental work 1999–2001                                                                           Tapiola
                                                                                                                                              will be known
           1. Starting environmental                                                                                                    as an exemplary company.
              operations 1997–1998




48   Environment
                                                Paper Use
                                               and Posting

Paper use in the Tapiola Group is being monitored for        Ninety-five per cent of the printed products of the Tapiola
the head office properties and for all of Tapiola. In 2005,   Group are printed on paper that has been awarded the
paper use by the Tapiola Group totalled 576 tons, and        Swan ecolabel. More than half of the soft tissue ordered
most of this came from mass printouts, customer mag-         for the Tapiola Group head office is manufactured of re-
azines, printed products and printouts from multifunc-       cycled fibres, and all the tissues have been awarded the
tional devices.                                              Swan label, except for one special product.

Tapiola sent out approximately 23 sheets of mass print-      Tons
outs per customer during the year. The relative number       160.0
has decreased by 11.2% since 2002. Total paper con-                                                                 Entire Tapiola
                                                             140.0             145.1
sumption of the Tapiola Group in 2005 was approxi-
                                                                                                                    Head office
mately 680 g per customer. In 2005, approximately 48         120.0                            121.6
sheets/person/working day were printed and copied us-        100.0
ing the multifunction devices. The relative amount has                  99.4                                 99.6
                                                              80.0                                                    84.2
decreased by 1.2% when compared to 2002.
                                                              60.0                                                           71.3
                                                                                       64.7
In 2005, the Tapiola Group sent out a total of 12,326,880                                             54.7
                                                              40.0
postal items, of which 92% were customer letters or mag-
                                                              20.0                                                                    26.3
azines and the rest direct marketing letters. The figure
does not include postal items sent inside the Group. Each      0.0                  s




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customer of the Tapiola Group received approximately 13
                                                                                es




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postal items during the course of the year 2005.
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                                 Environmental Impacts of
                                  Head Office Operations
Until 2005, the Tapiola Group head office operations          the yard less slippery, and the need for cooling the office
were located in four buildings in Espoo with a total cu-     premises during the exceptionally hot summer of 2005.
bic content of 295,910 m3. In 2006, two more offices          Since 2002, electricity consumption has lessened in one
were added. Heat consumption in the real estate in use       property and increased in two properties. (EN3)
in 2005 was 7,163 MWh (7,940 MWh when normalised).
Normalised heat consumption has increased by a total of      Water consumption in the head office in 2005 was
7% since 2002. On the other hand, the consumption has        20,369 m3, showing an increase of 1.4% when com-
remained at approximately the same level as in 2001.         pared to 2002 but a decrease of approximately 6% com-
The objective set in the Head Office Environmental Pro-       pared to 2001. In 2002, water consumption was reduced
gramme for 2002–2006 –an annual decrease of 1% in            because the restaurant in the head office building was
heat consumption –has not been reached.                      closed during a major renovation. The objective set for
                                                             the head office, an annual decrease of 1% in water con-
Total consumption of electricity in the same buildings       sumption, has been reached. (EN5)
in the premises managed by Tapiola in 2005 was 7,844
MWh. Comparable data on the development of electricity       A total of 135 tons of paper waste was collected in the
consumption in these properties is available for 2003–       head office in 2005. The amount of paper waste has
2005: during this time, the consumption of electricity       been notably reduced: by 23.8% when compared to
increased by 4.5%. The most significant factors that in-      2002, despite the fact that the number of personnel
creased electricity consumption during the period in ques-   and of customers has increased markedly. The reduction
tion were the electrical heating installed under the head    in the amount of paper waste can be explained by the
office building’s yard slab at the end of 2003 to make        fact that the departments have reduced their archives as




                                                                                                                                    Environment   49
          they have moved within the head office buildings during                                   CO2 profile for the head office operations in 2005 (tons)
          renovations. (EN11)

          Comparable figures for other waste types are available for
          the head office building, where approximately half of the                                                               Paper
          head office personnel work, or a total of approximately                                                                 consumption            Electricity
                                                                                                                                 1 161                  consumption
          960 persons. In 2005, a total of 286 tons of waste was                                         Letter
                                                                                                         transportation 310                             1 780
          created in the head office building, of which at least
          62.8% was utilised as raw material. The total utilisa-
                                                                                                                     Travel between
          tion level for waste was 91.5%, also including utilisa-                                                    home and office
          tion as an energy source. The total utilisation level has                                                  901
          increased by almost one percentage unit since 2002.                                                                              Heat consumption
          The total amount of waste has decreased by 8.7% when                                                                             2 220
          compared to 2001.

          The waste management partner used in the head office
          operations was changed in the beginning of 2005. Due
          to reporting changes made when the partner changed,
          we present below comparable total waste amounts and                                      Development of head office waste amount
          utilisation levels for 2001–2005.
                                                                                                                                  0.36

                                                                                                                     7.4 16.6
                                                                                                                                                                             Information security paper
                                                                                                                                                                             Recycling paper
                                                                                                                                           58.6                              Biowaste
                                                                                                                                                                             Cardboard
          Energy consumption in the head office real estate                                                    61.7                                                           Metal
                                                                                                                                                                             Other utilisable
       kWh/m3
                                                                                                                                                    27.6                     waste
          35                                                                                                                                                                 Energy waste
                                                                                                                                                                             Construction waste
          30                                  30,0 30,6                                                     20.1                                                             Grease trap waste
                       26,4                                                                                                               65.3                               Mixed waste
          25                                                             26,9          26,8 26,5
                24,9                 25,1                  25,4   24,9          24,2                                      16.6                                               Other hazardous waste
          20                  24,6                                                                       3.7 7.7
          15
          10
                  2001          2002              2003             2004                2005
                                                                                                   Development of head office waste amount and waste
                  Heat, kWh/m3                   Heat (norm.), kWh/m3
                                                                                                   utilisation level
                  Electricity, kWh/m3
                                                                                                    %                                                                                Tons
                                                                                                   100
                                                                                                   90
                                                                                                   80
          Water consumption in the head office real estate                                          70
         l/m3                                                                                      60      63.9                           65.3           63.1
                                                                                                                           61.4                                        62.8
          74
                                                                                                   50
          72           73.2
                                                                                                   40                      347            345                                        400
                                                                                                           296                                           307
          70                                              70.2           70.7                                                                                          286
                                                                                                   30                                                                                300
          68                                                                              68.8                     25.4            26.3                         27.0          28.7
                                                                                                   20                                            23.4                                200
                                       67.9
          66                                                                                       10                                                                                100
          64                                                                                        0                                                                                0
                                                                                                             2001                2002       2003           2004          2005
          62
                                                                                                             Used as energy                         Used as raw material
          60
                       2001           2002                2003           2004             2005                 Development of amounts of waste




50   Environment
                                                Development
                                                of Reporting

Some of the financial information in this report has been       lations with various stakeholders and those factors that
audited, and various other methods were used to confirm         genuinely reflect the health of the business operations,
the authenticity of the rest of the information. The con-      taking into account all the different sectors impacted by
tents of this report have been checked and approved by         the business operations, the key figures recommended
the Group’s Boards of Directors. The report manuscript         in the third GRI version cannot be deemed satisfacto-
was discussed in a joint meeting of the Boards of Direc-       ry. Tapiola participates in a project by the international
tors on 4 April 2006.                                          association of mutual insurance companies AISAM on
                                                               application of the GRI recommendations by mutual in-
                                                               surance companies. Furthermore, Tapiola has its own
Internal Audit supports realisation of                         projects underway to develop operations and reporting.
social responsibility                                          For example, we believe that the training impact index
                                                               describes how well we take care of the expertise of our
The Internal Audit of the Tapiola Group is a function of       personnel more accurately than the number of training
the Group responsible for independent and objective eval-      days. The index will be taken into use in 2007.
uation and certification of the business operations. The
Internal Audit Operation Plan for 2006 includes tasks          As we transfer to the new GRI arrangement, we will con-
related to certifying and developing the Social Respon-        tinue to develop our reporting process as well. The So-
sibility Report. These actions will, for their part, ensure    cial Responsibility Committee will be made into a more
the accuracy of the Social Responsibility Report and           active committee whose rules of procedure will be pre-
evaluate realisation of the social responsibility principles   sented to the joint meeting of the Boards of Directors
in the Group. Realisation of the internal audit and risk       for approval in June 2006. A Social Responsibility Prin-
management are studied in particular.                          ciples and Tapiola Values Recap Discussion is planned
                                                               for the future. The objective is to include these issues
At present, at the time of completion of this report, the      in the Internal Communications Programme for the new
Internal Audit personnel are being trained in special is-      strategic period.
sues related to certification of the Social Responsibility
Report. The objective is for auditing of the social respon-    The first social responsibility self-evaluation conducted
sibility of the various functions to be part of the normal     at the turn of the year under the supervision of consul-
operations of the internal audit.                              tants produced valuable development ideas concerning
                                                               the content of the report. These ideas will be taken into
                                                               account when compiling the next report. For example,
Proceeding towards external                                    more contributions are required to intensify equality work,
certification                                                   appreciate versatility and develop a working environment
                                                               that encourages innovation.
In the next few years, the objective is to have the Social
Responsibility Report certified by an external party. We        In the early summer of 2006, a comparison analysis with
are preparing for this with the support of Internal Audit      the best practices of the financing industry and this re-
and by means of various development projects.                  port will be made.

The third version of the Global Reporting Initiative (GRI)
will be finished at the end of the year 2006. Since the
purpose of the report is to describe the company’s re-




                                                                                                                Tapiola Group   51
                    Comparison with Global Reporting Initiative
                        Reporting Recommendation                                                       (4.1.)




     The Tapiola Group Social Responsibility Report 2005 follows the GRI recommendation where applicable.
     Abbreviations in the Handled column: K = Yes, E = No, O = Partially.

      ID                   GRI key figure                                               Handled p.       Comments
      Vision and strategy
      1.1.                Sustainable development vision                               K, 10
      1.2.                Review by the President                                      K, 3
      Description of Tapiola organisation
      2.1. - 2.8.         Basic information about company                              K, 6, 39
      2.9.                Stakeholders                                                 K, 22-23
      Scope of report
      2.10.               Contact information for issuer of report                     K, back cover
      2.11.               Reporting period                                             K, 2
      2.12.               Previous report                                              K, 2
      2.13.-2.16.         Limitations to the content of the report                     K, 6, 25
      2.17.               Adherence to the GRI                                         K, 2
      2.18.               Criteria for cost/benefit calculations                        E                Analyses have not been made.
      2.19.               Substantial changes in calculation methods                   K, 2             No changes.
      2.20.-2.21.         External and internal certification principles                K, 2
      2.22.               Receiving additional information                             K, 2
      Management
      3.1.-3.2.           Organisation and management structure                        K, 8, 9
      3.3.-3.4.           Operating processes in management of social responsibility   K, 11
      3.5.                Impacts of social responsibility on management merit pay     K, 10
      3.6.                Persons in charge                                            K, 11
      3.7.                Mission, values, operating principles                        K, 10
      3.8.                Shareholders’ initiative system                              K, 8
      3.9.-3.12           Interaction with stakeholders                                K, 17-24
      3.13.               Adherence to caution principle                               K, 9
      3.14.               Commitment to external initiatives and principles            K, 13
      3.15.               Memberships in organisations                                 K, 14
                                                                                                        Financial service products are
      3.16.-3.17.        Management of product chains, indirect impacts                O, 20, 30
                                                                                                        immaterial.
      3.18.              Changes in operations                                         E                Nothing to report.
      3.19.-3.20.        Management system, certification                               K, 13
      4.1.               Comparison with GRI recommendation content index              K, 52-53
      Financial responsibility key figures
      EC1                Turnover                                                      K, 7, 27         Social distribution of income
      EC2                Geographical market distribution                              K, 26-27
      EC3                Purchases of services and goods                               K, 30
      EC4                Adherence to payment deadlines                                K, 30
      EC5                Personnel expenses                                            K, 38
                                                                                                        There are no capital investors
      EC6                Distribution of profit to capital investors                    E
                                                                                                        in a mutual insurance company.
      EC7                Profit or loss at end of reporting period                      K, 24            Social distribution of income
      EC8                Taxes paid                                                    K, 24            Social distribution of income




52
EC9               Financial support received                                             E           There are none.
EC10              Support for purposes of public good                                    K, 19
EC13              Indirect financial impacts                                              O, 21
Environmental responsibility key figures
EN1               Use of materials                                                       E           Service company
                                                                                                     External waste cannot be
EN2                Utilisation of external waste                                         E
                                                                                                     utilised in this sector.
EN3+4              Energy consumption                                                    K, 46, 49
EN5                Water consumption                                                     K, 46, 49
                                                                                                     The main business sector does
                                                                                                     not have such impacts.
EN6 ja 7           Impacts connected with biodiversity                                   E
                                                                                                     Statistics in the real estate opera-
                                                                                                     tions are being developed.
EN8                Greenhouse gas emissions                                              K, 48
EN9+10             Emissions causing ozone depletion, acidification                       E
EN11               Waste                                                                 K, 49
EN12+13            Emissions to water; chemical, oil, etc. leaks                         E           None.
                   Environmental impacts of products, reuse percentage units                         There are none in a service
EN14+15                                                                                  E
                                                                                                     company.
EN16               Environmental damage and fines paid                                    E           None.
EN17               Programmes to improve energy efficiency                                E
                                                                                                     Only CO2 emissions are given
EN19               Other indirect consumption of energy, e.g., travel                    E
                                                                                                     for travel.
Social responsibility key figures
Personnel
LA1+2               Personnel statistics                                                 K, 31-32
LA3+4               Membership in professional organisations, negotiation mechanisms     K, 33-34
LA5-8               Occupational safety and health                                       K, 33-35
                                                                                                     A training impact index will be
LA9                Training                                                              K, 37
                                                                                                     taken into use in 2006.
LA10+11            Equality, gender distribution in management                           K, 33
LA12               Voluntary work relationship benefits                                   K, 34
LA13               Representation of employees in management                             K, 33
                                                                                                     There is none because no employ-
                   Further training programme in case of termination of employment
LA16                                                                                     K, 33       ment relationships have been
                   relationship
                                                                                                     terminated.
LA17               Lifelong learning                                                     K, 33
Human rights
                                                                                                     Not significant in
HR1-7              Human right issues                                                    E
                                                                                                     the Finnish market.
Social parties
SO1                Operations in neighbouring communities and dialogue with stake-       K, 20
SO2                Attitude towards bribery                                              K, 15
SO3                Attitude towards politics                                             K, 15
SO4                Recognitions received                                                 K, 15, 31
SO5                Aid for political activity                                            K, 15
SO6-7              Violations related to competition and pricing                         E           There are none.
Customers
PR1                Customer health and safety policy                                     K, 39
PR2                Policy regarding product information                                  K, 43
PR3                Protection of privacy                                                 K, 39
                   Violations of regulations regarding health and safety of customers,
PR4-5                                                                                    K, 39       There are none.
                   notifications received
PR6                Recognitions received                                                 K, 39, 45
PR8                Customer satisfaction issues                                          K, 42
PR9                Advertising regulations                                               K, 43
PR10               Violations regarding advertising and market regulation                K, 43       There are none.




                                                                                                                                            53
                                                                                                                Appendices: Key figures
     Customers’ assets managed by the Tapiola Group 1997–2005
           EUR billion                               15




                                                     10




                                                       5




                                                      0
                                                                    1997                         1998                       1999             2000    2001          2002                         2003                        2004                          2005
           Other companies
           of the Group                                               1.9                          2.2                        2.5              2.8   3.0             3.3                          3.7                         4.3                         4.9

           Tapiola Pension                                            3.1                          3.4                        3.7              4.1   4.5             4.8                          5.3                         5.7                         6.2

     The assets of customers managed by the Tapiola Group have more than doubled over the past decade. The figure includes as-
     sets in asset management and outside assets invested in the fund management company funds as well as customers’ assets
     included in the technical provisions of the companies.




        Strategy Work Coordination Committee 3 April 2006                                                                                                   Strategy Work Coordination Committee 3 April 2006



                                                                         Tapiola Group                                                                                                                   Tapiola Group Companies (Y)
                                                               Household customers,                                                                                                                   Most important key figures 2000–2005
                                                            most important key figures 2000–2004


                                                                                                                                                                                                             60.0
                                                     50.0

                                                                                                                                                                                                             40.0
                                                                                                                                                                                                %
                                               %




                                                     25.0
                                                                                                                                                                                                             20.0


                                                      0.0                                                                                                                                                      0.0
                                                                 2000             2001             2002              2003           2004     2005                                                                          2000            2001            2002            2003            2004            2005
                         Market coverage, %                      26.6             26.9              27.0             27.5           27.8                                                                                   32.1               41.0         42.3             44.1            43.5
                                                                                                                                                                               Market coverage, % (Y+F)
                         Customer relationship
                                                                 18.2             19.7              21.3             22.0           22.3     24.9
                         level, at least 3 baskets, %                                                                                                                          Customer relationship
                                                                                                                                                                               level, at least 3 baskets, %
                                                                                                                                                                                                                           29.5               36.5         39.4             49.5            52.4            51.9
                         Customer relationship
                                                                                                                      7.3           8.2      9.0
                         level. at least 4 baskets, %
                                                                                                                                                                               Customer relationship
                         Service grade, percentage                                                                                                                             level, at least 4 baskets, %
                                                                                                                                                                                                                                                                                            39.6            39.1
                                                                 32.0             34.0              35.0             31.0           32.0     42.0
                         of commendable evaluations
                                                                                                                                                                               Service grade, percentage
                                                                                                                                                                               of commendable evaluations
                                                                                                                                                                                                                             45               49             33                33            33                33

          Market coverage, %, share of Tapiola customers among all households Market coverage for 2005 will be available in July.                                 Market coverage = Including both F and Y sector customers. Market coverage for 2005 will be available in 2007.
          Customer relationship level, %, up to 2004 customers with at least 3 baskets, since 2004 with at least 4 baskets                                        Customer relationship level, %, up to 2004 customers with at least 3 baskets, since 2004 with at least 4 baskets.
                                                                                                                                                                  The customer relationship levels of 2004–2005 are not entirely comparable with the previous years due to changes in customer group definitions.




        Strategy Work Coordination Committee 3 April 2006                                                                                                   Strategy Work Coordination Committee 3 April 2006




                                                                    Tapiola-ryhmä                                                                                                                      Savings and investments, development
                                                                Corporate customers (F)                                                                                                                             1997–2005
                                                                     2002–2005                                                                                                                                    40.0


                                                   100.0                                                                                                                                                          30.0
                               1 000 persons




                                                                                                                                                                                                                  20.0
                                                                                                                                                                                                        %




                                                    90.0                                                                                                                                                          10.0


                                                                                                                                                                                                                   0.0


                                                    80.0                                                                                                                                                         -10.0
                                                                                                                                                                                                                            1997       1998        1999     2000       2001         2002     2003       2004        2005

                                                                                                                                                                                Savings and investments from                13.0        9.0        10.0      12.0       18.0        15.5      18.2       15.4       19.6
                                                                                                                                                                                customers at Tapiola, development
                                                    70.0                                                                                                                        Financing property of households,            6.0       11.0        34.0       0.0       -4.8        2.0       7.5        4.5        20.5
                                                                  2002                       2003                       2004               2005                                 development


                            Entrepreneurs (F)                      80.5                       81.7                       88.7              90.3
                                                                                                                                                                             (* Statistical clarification 2001, the previous years not entirely comparable.




54     Tapiola Group
Strategy Work Coordination Committee 3 April 2006                                                   Strategy Work Coordination Committee 3 April 2006




                                               Tapiola Bank                                                                                    Tapiola Group
                                        Deposits and credits capital                                                                        Number of personnel
                                               2003–2005                                                                                        2000–2005

                                           300.0                                                                                 3000
                            € million




                                           200.0                                                                                 2000




                                                                                                                       Persons
                                           100.0                                                                                 1000
                                              0.0
                                                    12/2003   6/2004   12/2004   6/2005   12/2005                                     0
                                                                                                                                             2000       2001   2002   2003   2004   2005
                                        Deposits,
                                                     21.7      82.6     156.5    161.2     261.0            Number of personnel,
                                        capital
                                                                                                            persons, incl. persons            2192      2319   2446   2517   2586   2730
                                        Credits,
                                                     10.3      32.8     173.3    158.8     298.0            on holiday without pay
                                        capital




                                              Social Responsibility Committee (2.22)
                                              Markku Kosola, Director (Social Relations), chairperson
                                              Markku Haapalainen, Assistant Director (Regional Operations Executive Team)
                                              Kaisu Holopainen, Corporate Brand Director
                                              Sirpa Kaisanlahti, Personnel Director
                                              Heikki Kanniainen, Elected Representative (Sales Personnel)
                                              Iiro Ketola, Elected Representative (Office Personnel)
                                              Pekka Killström, Controller (Financial Management)
                                              Mikko Koskensyrjä, Risk Manager (Environmental Issues)
                                              Harri Lauslahti, Managing Director (Tapiola Bank)
                                              Arja Suomi, CSR coordinator (Social Relations), presenting secretary
                                              Ulla Tujunen, Assistant Director (Information Services)
                                              E-mail addresses are in the form forename.surname@tapiola.fi.
                                              This report has been edited by Arja Suomi. Layout and
                                              illustrations made in the Tapiola Group Marketing Services
                                              Studio. Layout: Iris Kieme. Graphics: Artto Lauri.
                                              This document was translated by Lionbridge Oy.
                                              Published by: (2.10.) Tapiola Group




                                                                                                                                                                             Tapiola Group   55
                    Tapiola Group
             FIN-02010 TAPIOLA, Finland

Street address: Revontulentie 7, Tapiola, Espoo, Finland

            Tel. +358 (0)9 4531 exchange

               Web pages: www.tapiola.fi
                                                           X00.020, 04.2006
www.Corporateregister.com 26/07/2007

				
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