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Notes to the Accounts

15 Financial Assets
               
           
Group's financial assets comprise investments in derivatives, financial assets designated as at fair value through p/l, loans and receivables, available-for-sale financial assets and investments in subsidiaries. The Holding segment includes also investments in subsidiaries.
 
The Group uses derivative instruments for trading and for hedging purposes. The derivatives used are foreign exchange, interest rate and equity derivatives. In P&C insurance business, fair value hedging has been applied during the financial year. In Life insurance, both fair value and cash flow hedging have been applied.
               
P&C insurance            
               
EURm         2010 2009
Derivative financial instruments         63 84
Financial assets designated as at fair value through p/l 90 163
Loans and receivables         73 3
Financial assets available-for-sale         10,999 9,998
P&C insurance, total         11,226 10,248
               
Life insurance            
               
EURm         2010 2009
Derivative financial instruments         58 66
Financial assets designated as at fair value through p/l 61 50
Loans and receivables         26 26
Financial assets available-for-sale         5,598 5,074
Life insurance, total         5,745 5,216
               
Holding            
               
EURm         2010 2009
Derivative financial instruments         36 12
Loans and receivables         1 1
Financial assets available-for-sale         695 172
Investments in subsidiaries         2,370 2,370
Holding, total         3,101 2,554
               
Elimination items between segments         -2,563 -2,538
             
Group, total         17,508 15,479
               
               
P&C Insurance            
               
Derivative financial instruments
               
    2010 2009
    Fair value Fair value
EURm Contract/ notional amount Assets Liabilities Contract/ notional amount Assets Liabilities
Derivatives held for trading            
  Interest rate derivatives            
  OTC derivatives            
  Intrerest rate swaps 162 5 - 435 18 0
               
  Exchange traded derivatives            
  Interest rate futures 809 3 0 308 4 0
  Interest rate options, bought and sold       106 0 0
  Total interest rate derivatives 970 8 0 849 22 0
               
  Foreign exchange derivatives            
  OTC derivatives            
  Currency forwards 3,963 54 75 3,335 62 88
  Currency options, bought and sold - - - 30 0 0
  Total foreign exchange derivatives 3,963 54 75 3,365 62 88
               
  Equity derivatives            
  OTC derivatives            
  Equity and equity index options 2 1 - 1 0 0
               
Total derivatives held for trading 4,935 63 75 4,215 84 88
               
Derivatives held for hedging            
  Fair value hedges            
  Currency forwards 189 0 0 217 - 0
Total derivatives 5,124 63 75 4,432 84 89
               
               
Other financial assets
               
EURm         2010 2009
Financial assets designated as at fair value through p/l    
  Debt securities            
  Issued by public bodies         70 66
  Government bonds         69 65
  Other         1 1
  Certificates of deposit issued by banks 3 25
  Other debt securities         17 45
  Total debt securities         90 136
               
  Listed debt securities EURm 90 (134).    
               
  Equity securities            
  Listed         0 25
  Unlisted         - 0
  Total         0 25
               
Total financial assets designated as at fair value through p/l 90 161
               
Loans and receivables            
  Deposits with ceding undertakings 0 1
  Other         73 2
Total loans and receivables         73 3
               
Financial assets available-for-sale            
  Debt securities            
  Issued by public bodies         427 1,566
  Government bonds         346 1,493
  Other         81 73
  Certificates of deposit issued by banks 1,859 1,931
  Other debt securities         6,939 5,300
  Total debt securities         9,226 8,797
               
  Listed debt securities EURm 8,247 (8,311).    
               
  Equity securities            
  Listed         1,637 1,166
  Unlisted         137 36
  Total         1,774 1,202
               
Total financial assets available-for-sale 10,999 10,000
               
Financial assets available-for-sale for P&C insurance include impairment losses EURm 179 (170).
               
P&C Insurance, total financial assets 11,226 10,248
               
               
Life insurance            
               
Derivative financial instruments
               
    2010 2009
    Fair value Fair value
EURm Contract/ notional amount Assets Liabilities Contract/ notional amount Assets Liabilities
Derivatives held for trading            
  Interest rate derivatives            
  OTC derivatives            
  Interest rate swaps 760 28 - 766 41 -
  Credit risk swaps 117 0 0 - - -
  Total 877 28 0 766 41 -
               
  Exchange traded derivatives            
  Interest futures 100 - 1 340 7 -
  Interest options, bought and sold 300 1 1 300 4 3
  Total 400 1 3 640 10 3
  Total interest rate derivatives 1,277 30 3 1,406 51 3
               
  Foreign exchange derivatives            
  OTC derivatives            
  Currency forwards 1,754 24 8 724 3 18
  Currency options, bought and sold 120 1 1 128 1 1
  Total foreign exchange derivatives 1,874 25 9 852 4 19
               
  Commodity derivatives            
  OTC derivatives            
  Commodity swaps - - - 14 - 0
               
Total derivatives held for trading 3,151 54 12 2,272 54 22
               
Derivatives held for hedging            
  Fair value hedges            
  Currency forwards 461 - 14 227 - 10
  Interest rate swaps 33 1 - - - -
  Total 494 1 14 227 0 10
               
  Cash flow hedges            
  Interest rate swaps 88 3 - 365 12 -
               
Total derivatives held for hedging 582 4 14 591 12 10
               
Total derivatives 3,733 58 26 2,863 66 32
               
Fair value hedges
 
Fair value hedging is used to hedge a proportion of foreign exchange and interest risk in available-for-sale financial assets. The interest elements of forward contracts have been excluded from hedging relationships in foreign exchange hedges, as well as the share of credit risk in interest risk hedges.
 
Net gains from exchange derivatives designated as fair value hedges amounted to EURm 4 (-9). Net losses from hedged risks in fair value hedges of available for sale financial assets amounted to EURm 3 (9).
 
Net gains from interest rate swaps designated as fair value hedges amounted to EURm 1 (-) milj. euroa. Net losses from hedged risks in fair value hedges of available for sale financial assets amounted to EURm -1 (-).
             
Cash flow hedges
 
Cash flow hedges have been used to hedge future interest payments resulting from floating rate interest-bearing assets. The hedged items designated are interest payments from EUR denominated bonds.The effectiveness of the hedging relationships is assessed prospectively using the critical terms match method. An effectiveness test is carried out retrospectively using the hypothetical swap method.
 
At 31 Dec. 2010 he total amount of gains recognised in equity from the changes in the fair values of hedging instruments was EURm 12 (15). These gains are recognised in the income statement at the time when the hedged items affect profit or loss. The table below the periods when the cash flows are expected to occur and when they are expected to affect profit or loss.
               
EURm     Total Up to 1 year 1 - 2 years 2 - 3 years
From hedging instruments            
  Receivable cash flows (forecast)     6 3 2 0
  Payable cash flows (forecast)     -2 -1 -1 0
Net     4 2 1 0
               
Most of the cash flows are forecast to occur during the first two years.
               
Other financial assets
               
EURm         2010 2009
Financial assets designated as at fair value through p/l    
  Debt securities            
  Issued by public bodies         19 9
  Government bonds         19 9
  Other         0 0
  Certificates of deposit issued by banks 24 21
  Other debt securities         18 15
  Total debt securities         61 46
               
  Listed debt securities EURm 20 (7).    
               
  Equity securities            
  Listed         0 1
  Unlisted         - 3
  Total         0 4
               
Total financial assets designated as at fair value through p/l 61 50
               
Loans and receivables            
  Deposits with ceding undertakings 1 2
  Loans         25 24
Total loans and receivables         26 26
               
Financial assets available-for-sale            
  Debt securities            
  Issued by public bodies         107 34
  Government bonds         107 34
  Other            
  Issued by banks         1,480 1,736
  Other debt securities         1,655 1,520
  Total debt securities         3,242 3,289
               
  Listed debt securities EURm 3,155 (3,249).    
               
  Equity securities            
  Listed         1,738 1,360
  Unlisted         619 425
  Total         2,357 1,785
               
Total financial assets available-for-sale 5,598 5,074
               
Financial assets available-for-sale for life insurance include impairment losses EURm 131 (183).
               
Life insurance, total financial assets 5,745 5,216
               
Financial assets available for sale / debt securities: Debt securities available for sale include EURm 2,709 (2,500) investments in bonds and EURm 533 (789) investments in money market instruments.  
   
Financial assets available for sale /shares and participations: Listed equity securities include EURm 674 (554) quoted shares. Unlisted equity securities include EURm 551 (359) investments in capital trusts.  
               
               
Holding            
               
Derivative financial instruments
               
    2010 2009
    Fair value Fair value
EURm Contract/ notional amount Assets Liabilities Contract/ notional amount Assets Liabilities
Derivatives held for trading            
  Interest derivatives            
  OTC-derivatives            
  Interest rate swaps 1,075 29 - 975 7 -
               
  Equity derivatives            
  Exchange traded derivatives            
  Equity options 95 7 10 42 4 7
               
  Exchange derivatives            
  OTC-derivatives            
  Currency forwards - - - 48 1 0
               
Total derivatives 1,170 36 10 1,065 12 7
               
               
Other financial assets
               
EURm         2010 2009
Loans and receivables            
  Deposits         1 1
               
Financial assets available-for-sale            
  Debt securities            
  Certificates of deposit issued by banks 509 11
  Other debt securities         151 125
  Total debt securities         659 135
               
  Listed debt securities EURm 553 (32).    
               
  Equity securities            
  Listed         - 0
  Unlisted         36 36
  Total         36 36
               
Total financial assets available-for-sale 695 172
               
Financial assets available-for-sale for Holding business include impairment losses EURm 2 (2).
               
Investments in subsidiaries         2,370 2,370
             
Holding, total financial assets         3,101 2,554
             
Elimination items between segments -2,563 -2,538
             
Group, total         17,508 15,479
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