Corporate Governance Statement
Risks and risk management
Capital adequacy management
Compliance
Internal Audit
Auditor

Corporate Governance Statement 

Taaleri’s corporate governance is based on the laws of Finland and the company’s Articles of Association. The company complies with the rules, regulations, and guidelines for listed companies issued by Nasdaq Helsinki Ltd and the Finnish Financial Supervisory Authority as well as the Finnish Corporate Governance Code 2020 published by the Securities Market Association.

The auditing firm of Ernst & Young Oy has verified that the statement has been issued and that the general description of internal audit and risk management systems associated with the financial reporting process conforms to the same in financial statements.

The code is available on the Securities Market Association website www.cgfinland.fi.

Taaleri’s Corporate Governance Statement referred to in the Corporate Governance Code. 

Risk management and risk position

The task of risk management is to identify, assess, measure, treat and control risks in all Taaleri Group’s businesses that influence the realization of the Group’s strategic and operative goals, as well as to oversee compliance with the principles approved by the Taaleri Plc’s Board of Directors.

Risk management aims to mitigate the likelihood of unforeseeable risks being realized, and their influence on and the threat they present to Taaleri Group’s business operations. Risk management supports achievement of strategic goals by promoting better utilization of opportunities in all activities and more efficient distribution of risk-taking capacity to the different functions and projects within the defined risk appetite framework.

Taaleri Group’s risks are divided into five main categories: strategic and business risk, credit risk, liquidity risk, market risk and operational risk (including compliance risk). In addition, Taaleri follows the development of political risks. The principles of Taaleri's risk and capital adequacy management are described in note 38 to the 2020 financial statements.

The risk capacity of the Taaleri Group consists of a properly optimized capital structure, profitability of business operations and qualitative factors, including good corporate governance, internal control, and proactive risk and capital adequacy management. Taaleri Group’s attitude towards risk-taking is based on careful consideration of an adequate risk/return relationship. Taaleri Plc’s Board of Directors has decided that the Group may not in its activities take a risk that jeopardizes the target level set for the company’s own funds.

Segment-specific risks

Taaleri’s continuing operations include two reported segments: Private Asset Management, which is divided to Renewable energy and Other private asset management, and Strategic Investments, which includes Garantia Insurance Company. The group Other presents Group’s non-strategic investments, Taaleri Kapitaali and Group operations not included in the business segments.

Private Asset Management segment: In reporting the Private Asset Management segment is divided into Renewable energy and Other private asset management. Renewable energy includes Taaleri Energia, which develops and invests in industrial-scale wind and solar power projects. It also manages investments throughout their lifecycle. The other areas within Private Asset Management include Taaleri’s real estate, bioindustry and infrastructure businesses. Group investments that support the core business and the development of the businesses reported under the Private Asset Management segment are reported under the

The main risks of Taaleri’s private equity fund operations consist mainly of operational risks and, to a slight extent, credit risks. The result of the business is influenced by the development of assets under management, which depends among other things on the progress of private equity fund projects, the development of capital markets and the success of the cooperation with Aktia. The profit development is also influenced by the realization of performance fee and the success of own investment projects. On the other hand, private equity fund management fees are based on long-term contracts that bring in a steady cash flow.

The objective of the renewable energy business is to channel assets under management to renewable energy production projects and to other energy projects supporting sustainability. The goal is to internationalize and expand the renewable energy business considerably, which naturally increase the risks relating to the growth and internationalization of the operations. The earnings of the renewable energy business are impacted by its success in finding suitable projects, its ability to identify all risks related to renewable energy’s international development, construction, financing and operations, and its success in the internationalization of its operations. The earnings of the renewable energy business Energy are also affected by the success of its own investments in energy projects.

Strategic Investments segment: The objective of Garantia is to modernize collateral practices and provide customers with easy and cost-effective guaranty solutions and new business opportunities through digital channels. The company's business is divided into guaranty insurance and investment operations.

The insurance and investment activities carried out by Garantia Insurance Company are central to Taaleri's risk position. The main risks associated with Garantia’s business operations are credit risks arising from guaranty operations, and the market risk regarding investment assets. Garantia’s capital adequacy is strong, and its risk position has remained stable.

Other group: The group Other is used to present the Group’s non-strategic investments, Taaleri Kapitaali and Group operations not included in the business segments. The most significant risks of the Other group consist primarily of private investments and financing granted by Taaleri Sijoitus Oy as well as of credit risks related to Taaleri Plc’s granted loans and receivables from credit institutions. In addition to the commission income of Taaleri Kapitaali, the Other group’s earnings consist of the fair value changes in investments and of profits/losses gained in connection with the sales of its investments. The earnings and results of the Other group may thus vary significantly between periods under review.

Capital adequacy of taaleri

Capital adequacy under the Act on the Supervision of Financial and Insurance Conglomerates

For the time being Taaleri Group continues to form a financing and insurance conglomerate, according to the Act on the Supervision of Financial and Insurance Conglomerates (RaVa) (2004/699).

As a RaVa conglomerate, Taaleri Group discloses its own funds and capital adequacy in accordance with the capital adequacy regulations for financial and insurance conglomerates. At the end of June 2021 Taaleri RaVa conglomerate’s Tier 1 capital amounted EUR 193.3 (97.1) million, Tier 2 capital amounted EUR 14.8 (14.8) million and own funds amounted EUR 208.2 (111.9) million, with the minimum requirement being EUR 59.6 (61.7) million. Contrary to the previous practice, Taaleri has reduced the equalization amount exceeding Garantia’s solvency requirement (a total of EUR 19.6 million) and restated the comparison period accordingly. The conglomerate’s capital adequacy was EUR 133.8 (50.3) million ja the capital adequacy ratio was 349.6 (181.5) per cent, with the minimum requirement being 100 per cent.

Within the Taaleri Group, the regulatory capital according to Solvency II is determined and reported not only for Garantia Insurance Company Ltd but also for Taaleri Plc as a part of the RaVa conglomerate. The total solvency capital requirement (SCR) of the parent company Taaleri Plc and the subsidiary Garantia Insurance Company Ltd was EUR 55.0 (50.0) million.

Taaleri’s own funds fully comprise its own unrestricted Tier 1 basic funds and a 10-year EUR 15 million Tier 2 bond issued by Taaleri Plc.

Capital adequacy of RaVa conglomerate, EUR 1,000 30.6.2021 31.12.2020
Shareholders’ equity of the Taaleri Group 216,671 133,209
Goodwill and other intangible assets -1,021 -6,778
Non-controlling interests 691 1,134
Dividend for 2020 - -9,072
Own funds attributable only to insurance sector -19,591 -21,387
Tier 1 capital 193,310 97,105
Tier 2 capital 14,846 14,839
Conglomerate’s own funds, total 208,157 111,945
Financing business’ requirement for own funds 4,545 11,783
Insurance business’ requirement for own funds 55,005 49,900
Minimum amount of own funds of the Conglomerate total 59,550 61,683
Conglomerate’s capital adequacy 133,761 50,261
Conglomerate’s capital adequacy, ratio 349.6% 181.5%

Solvency according to the Insurance Companies Act (Solvency II)

Garantia’s solvency strengthened. The company’s basic own funds amounted to EUR 124.0 (114.1) million at the end of June 2021. Solvency capital requirement was EUR 51.3 (49.7) million. The solvency ratio, or the ratio of basic own funds to the solvency capital requirement, was 241.6 per cent (229.4).

In the first half of the year, basic own funds grew due to accumulated profits and the increases in the fair values of investment assets. The solvency capital requirement grew as a result of increased capital requirement for market risks and an increase in the capital add-on. The growth in the capital requirement for market risks was attributable to increasing equity and foreign exchange risks.

During the reporting period, Garantia changed its Solvency 2 calculation principles regarding the definition of foreseeable dividends. According to the new definition, and the company’s dividend policy, the company only considers dividends foreseeable when the dividend distribution criteria related to solvency, credit rating and financial results can be estimated to be satisfied with certainty. Hence, the company no longer deducts foreseeable dividends from basic own funds before the end of the financial year.

Solvency II capital adequacy regulations do not fall within the sphere of statutory audit, and hence the Solvency 2 figures have not been audited.

Compliance

The Group Risk Officer and the Compliance Officers in regulated businesses are responsible for Taaleri’s compliance.

The tasks of the compliance are to:

  • monitor compliance with regulations and internal guidelines
  • advise the Executive Management Team and the Board of Directors and other personnel on compliance with regulatory and internal guidelines
  • assist the management teams and other relevant bodies in regulated companies regarding regulatory compliance issues and related compliance risk management by keeping heads of businesses aware of the essential changes in regulations and the potential impact on business
  • monitor and regularly evaluate the adequacy and effectiveness of the Group’s and group companies’ measures and procedures to ensure compliance
  • be responsible for management of anti-money laundering and AML training in the Group.

 

Internal Audit

Internal Audit is an assurance function independent of the operational functions of the Taaleri Group companies. The Internal Audit function is set up by the Board of Directors and operates under the authority of the Group CEO. Taaleri Group has outsourced the practical implementation of the Group’s internal audit to an external service provider.

Internal Audit is an independent, objective assurance and consulting activity designed to check the adequacy, effectiveness and efficiency of internal control. Internal Audit supports the Group’s senior and operational management (Board, CEO, line managers) in managing and supervising operations.

 

Auditor

The company has one auditor that must be an audit firm defined in the Auditing Act. The auditor is elected at the Annual General Meeting for a term of office which ends at the end of the first Annual General Meeting following the election.

Authorised public accountants Ernst & Young Oy were elected as auditor at Taaleri Plc’s Annual General Meeting held on 25 March 2021. Ulla Nykky APA was elected as the appointed auditor.