nd Nordic IR-Seminar/E. Grannenfelt1 Cross-border investment - wishful thinking? Eeva Grannenfelt Vice President, Capital Markets Pension Fennia

nd Nordic IR-Seminar/E. Grannenfelt2 Cross-border investment - wishful thinking? AGENDA Pension Fennia Investment strategy * Allowed asset classes * Efficient frontier * Equity strategy * Fixed income strategy Expectations on IR-personal Corporate Governance

nd Nordic IR-Seminar/E. Grannenfelt3 PENSION FENNIA * In Finland the employer is obliged to arrange pension benefits for his employees by taking out insurance in a private pension insurance company or by establishing 1 a pension fund. * 6 pension insurance companies in Finland. * The market share of Pension Fennia is approximately 10 %. * The Finnish statutory earnings-related pension scheme is a partially funded scheme. * Roughly 3/4 of the premiums are used immediately to pay pensions while the rest is funded for the future. * Pension Fennia is a part of The Fennia Group. Joint field organisation provides clients with all non-life, pension and life insurance services. Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt4 Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt5 Allowed asset classes * Equities (Pan-Europe, USA, Asia including Japan) * Fixed Income (USA, EURO-land, Sweden, U.K.) * Real estate * Customer loans Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt6 INVESTMENT STRATEGY * Increase the share of equities * Increase the share of credit risk * Increase private equity and other alternative assets classes Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt7 Efficient frontier * Maximise return with accepted risk level * Try to achieve optimal long term allocation of assets Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt8 6.20% 6.30% 6.40% 6.50% 6.60% 6.70% 6.80% 6.90% 7.00% 7.10% 4.00%4.50%5.00%5.50%6.00% Volatility, % Expected return, % 12/98 5/99 6/98 7/99 10/99 21 % 19 % EFFICIENT PORTFOLIO AND CHANGES OF PROTFOLIO Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt9 Finland 55 % Pan-Europe 25 % USA 12 % Asia 8 % Small Caps Global Pharma Global Techno Global Active Emerging markets Nokia + Sonera 33 % Global Telecom (4 %) (5 %) (21 %) (70 %) EQUITY STRATEGY: CORE AND SATELITIES Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt10 SHARE OF INTERNATIONAL DIVERSIFICATION AND EXPECTED RISK Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt Auto Bank Basic Recources Chemical Construction Cyclical Goods & Service Non - cyclical Goods & Service Energy Financial Services Food & Beverage Healthcare Industrial Goods & Service Insurance Media Retail Technology Telecom Power Suppliers SECTORS DJ STOXX DJ EURO STOXX % Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt Auto Bank Basic Recources Chemical Construction Cyclical Goods & Service Non - cyclical Goods & Service Energy Financial Services Food & Beverage Healthcare Industrial Goods & Service Insurance Media Retail Technology Telecom Power Suppliers SECTORS % DJ STOXX-50 DJ EURO STOXX-50 Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt13 Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt14 Fixed income strategy * Corporate credit new, but growing asset class * Only large and rated companies * USA trend Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt15 12/1999 Long term 80 % AAA-AA euro/government 20 % AAA-BBB (ex. government) minimum 30 % AAA-AA euro/government max. 70 % AAA-BBB (ex. government) max. 10% max. 10 % High Yield International Benchmark EFFAS, all euro governmet bonds FIXED INCOME MORE CREDIT Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt16

nd Nordic IR-Seminar/E. Grannenfelt17 EXPECTATIONS ON IR-PERSONAL 1) As means of competition consistent shareholder value an important factor 2) Sufficient and essential information - company - division - sector 3) Annual and quarterly reports - history - expectations 4) Personal contacts Cross-border investment - wishful thinking?

nd Nordic IR-Seminar/E. Grannenfelt18 Cross-border investment - wishful thinking? EXPECTATIONS ON IR-PERSONAL 5) Compensation systems - option schemes - other benefits 6) Public relations is part of our corporate government system

nd Nordic IR-Seminar/E. Grannenfelt19 Cross-border investment - wishful thinking? CORPORATE GOVERNANCE *The mission of Pension Fennia *Ethical principles *Return and risk expectations (diversification and used indices) *Co-operation with company management *Voting in annual meetings *Board of directors *Dividend policy *Compensation systems *Co-operation with other shareholders

nd Nordic IR-Seminar/E. Grannenfelt20 Cross-border investment - wishful thinking? Monitoring systems *Legislation and other authorities *Other interest groups *Company auditors *Internal auditors and monitoring systems *Company meetings (road shows) *Analysts comments *Using our voting right *Going exit (sell your stocks)

nd Nordic IR-Seminar/E. Grannenfelt21 Cross-border investment - wishful thinking? How to monitor companies outside Finland *Exit (sell your stocks) *Proxy voting *Voting through internet *Using of corporate monitoring companies *Co-operation with other owners

nd Nordic IR-Seminar/E. Grannenfelt22 Cross-border investment - wishful thinking? As a Nordic institutional investor we have to keep in mind after *The group of potential investors has increased significantly *Indexation; only big well known names => more demands are made on investment and management policies