Annual Review 2013 Länsförsäkringar Alliance Länsförsäkringar in brief Customer-owned regional insurance companies with local presence

Non-life insurance Bank

Leader in Swedish non-life The fifth largest retail bank insurance close to customers

Länsförsäkringar has insured Swedes for more than 200 years, Länsförsäkringar is Sweden’s fifth largest retail bank. The banking and today, about 2.8 million people are insurance customers of the operations are conducted only in Sweden and business volumes local regional insurance companies. Confidence is equally high have grown on a broad front in all areas. The strategy is to offer among companies in Sweden – the market share is slightly more banking services to the Länsförsäkringar Alliance’s customers and than 35%. More than 70% of agricultural customers have selected leverage Länsförsäkringar’s strong brand and local presence Länsförsäkringar. Local claims adjustment, with quick and compe- through the customer-owned regional insurance companies. The tent management close to customers is a hallmark of Läns- primary target group is retail and agricultural customers and small försäkringar. businesses.

Closeness in all customer Complete security meetings Customers are provided with a com- Länsförsäkringar works in all OFFERING plete offering of banking, insurance channels and in all customer and real-estate brokerage services Bank Insurance Real-estate meetings with a brand promise brokerage from their respective regional insur- based on closeness. The percep- ance company. A comprehensive tion of greater closeness and less approach to customer meetings distance in a relationship with characterises the entire operation. Länsförsäkringar is the guiding Regardless of whether they occur in principle for everything – from person, on the telephone or via digi- 23 LOCAL COMPANIES product development to a per- tal channels, customer meetings are sonal customer meeting. The to be based on the customer’s needs principle of closeness is based and the breadth of Länsförsäkrin- on a number of types of close- gar’s offering. This holistic approach ness, for example, geographic is taken into consideration in the proximity, closeness of attitude 3.5 million customers development and offering of non-life and closeness in terms of insurance, life assurance, pension decision-making. insurance, banking services and real-estate brokerage. Customer-owned regional insurance companies with local presence

Life assurance and pension insurance Real-estate brokerage

Best pension partner Comprehensive real-estate for customers brokerage­

In life assurance and pension insurance, Länsförsäkringar focuses In addition to assistance from experienced and knowledgeable on long-term savings and insurance coverage and offers occupa- brokers, Länsförsäkringar Fastighetsförmedling’s comprehensive tional pensions in both fund management and guarantee manage- real-estate brokerage also provides home-buyers and home-sellers ment. Together with the regional insurance companies and exter- with access to a broad range of banking and insurance services, nal brokers, Länsförsäkringar strives to work to ensure that its cus- financial advisory services, legal advice and extensive claims pre- tomers receive a higher pension for their money and have a better vention expertise. Länsförsäkringar Fastighetsförmedling always understanding of their pension. has a local base, as part of the regional insurance companies’ offering.

Contents Customers are our only Strong brand and satisfied principal customers

Long-term respect for customers’ Länsförsäkringar’s local method of work- ­security is fundamental to Läns- ing close to its customers and owners is 2 2013 in brief försäkringar, since customers are highly appreciated, as can be seen in 4 Comments both the principal and owner. The regular customer satisfaction and repu- 6 This is Länsförsäkringar approach is always characterised by tation surveys. The brand is very strong 8 Owner control the view that Länsförsäkringar is compared with competitors in the bank- 10 Sustainability at Länsförsäkringar handling its customers’ money, not ing and insurance industry. Nordic 16 Non-life insurance its own, regardless of whether the Brand Academy’s 2013 Reputability 24 Bank company is dealing with insurance, Barometer showed that Länsförsäkringar 30 Life assurance and pension insurance pension savings or banking services. has the highest reputation among com- 36 Real-estate brokerage panies in the industry. Länsförsäkringar has long held a top ranking in the cus- 37 Länsförsäkringar Alliance in figures tomer satisfaction survey performed by 48 Länsförsäkringar AB the Swedish Quality Index, which mea- 51 Terms and expressions sures how satisfied customers are with 52 Financial calendar 2014 their bank and insurance company. 53 Addresses

länsförsäkringar alliance 2013 1 2013 in brief

Almost half a billion back to customers

Profit for non-life insurance was stable, despite large storm-related claims towards the end of the year. Very strong investment income contributed to operating profit amounting to almost SEK 4 billion. Based on profit for 2013, the regional insurance companies will pay back a total of SEK 488 M in bonuses and discounts.

Exceeded SEK 20 High volume growth in Bank gaining billion in premiums ­unit-linked insurance ground Growth in Länsförsäkringar’s unit-linked life For the first time, the Länsförsäkringar Alli- assurance company was high and insurance Business volumes in the banking operations ance surpassed SEK 20 billion in premiums capital increased 24% to SEK 77.5 billion. increased 11% to SEK 314 billion (283). The earned in non-life insurance. Volumes Higher volumes led to improved profitability. number of customers rose 4% till 879,000. Läns- increased almost 4%. försäkringar is Sweden’s fifth largest retail bank.

Positive reception for new Capital strength traditional management The Länsförsäkringar Alliance continues to have At the end of May, the first offers were sent to customers inviting them to change the conditions favourable capital strength in relation to the risks of their insurance product to New Trad. Lower guarantee levels and lower fees allow for a in the operations. Solvency capital strengthened changed investment mix with a higher expected return. The offer was positively received and by SEK 4,721 M in 2013 to SEK 40,458 M and slightly more than 13,000 positive responses had been received by year-end 2013. The offer the solvency margin amounted to 206% (182). will continue to be sent out in 2014 and 2015.

Market shares of non-life insurance, Market shares of premium income in fund Market shares of bank, deposits in retail share of premiums paid management, occupational pensions excl. market collective agreements

Länsförsäkringar 21.9% Länsförsäkringar 29.9% Länsförsäkringar 4.5% SEB 19.1% If 18.2% Swedbank 21.0% SPP 16.3% Trygg Hansa 16.0% Handelsbanken 17.8% Skandia 14.5% Folksam 15.9% Nordea 15.8% Movestic 5.8% Moderna 3.3% SEB 11.9% Swedbank 4.7% Captivebolag 2.7% Danske Bank 2.6% Nordea 3.4% Dina Federation 2.6% Skandiabanken 2.4% Folksam 1.7% Zürich 1.6% AMF Pension 0.7% Other 24.0% Other 9.9% Other 1.7%

Länsförsäkringar maintained its leading position in Länsförsäkringar’s share of the non-collectively The market position in deposits from households the non-life insurance market, with a market share agreed occupational pensions market in fund strengthened during the year from 4.3% to 4.5%. of 29.9%. ­management was 21.9%.

2 länsförsäkringar alliance 2013 Five-year summary Result for the regional insurance companies

Länsförsäkringar Alliance Technical result1) Operating profit1) 2013 2012 2011 2010 2009 SEK M 2013 2012 2013 2012 Total capital, SEK M 41,518 36,681 33,215 35,038 32,077 Länsförsäkringar Norrbotten 66 21 125 92 Länsförsäkringar Västerbotten 49 65 268 217 Länsförsäkringar Alliance’s non-life insurance Länsförsäkringar Jämtland 27 14 103 73 Länsförsäkringar Västernorrland 24 25 40 44 Solvency capital, SEK M 40,458 35,737 32,709 34,724 31,747 Länsförsäkringar Gävleborg 0 38 16 66 Solvency margin, % 206 182 171 190 174 Dalarnas Försäkringsbolag 147 100 446 337 Return on equity, % 10 8 –5 8 18 Länsförsäkringar Värmland 50 46 112 92 Premiums earned after ceded reinsurance, SEK M 20,067 19,363 18,756 18,184 17,828 Länsförsäkringar Uppsala 37 63 121 132 Technical result, SEK M 1,247 1,439 856 529 1,688 Länsförsäkringar Bergslagen –44 77 219 260 Operating profit/loss, SEK M 3,863 3,013 –2,273 2,552 5,449 Länsförsäkringar Stockholm –41 39 30 100 Combined ratio 98 97 100 102 96 Länsförsäkringar Södermanland –9 16 152 129 Länsförsäkringar Göteborg och Bohuslän 122 42 446 290 Länsförsäkringar AB, Group1) Länsförsäkringar Skaraborg 28 50 68 86 2013 2012 2011 2010 2009 Länsförsäkringar Östgöta 6 132 352 335 Operating profit, SEK M 923 819 287 536 693 Länsförsäkringar Älvsborg 82 103 479 250 Solvency capital, SEK M 18,031 15,590 14,800 10,613 8,710 Länsförsäkringar Gotland 20 16 80 55 Total assets, SEK M 322,550 290,994 253,223 173,835 157,005 Länsförsäkringar Jönköping 28 88 250 253 Return on equity, % 5 5 2 62) 7 Länsförsäkringar Halland 16 51 128 107 1) Excluding the life-assurance operations, which are conducted with a prohibition against issuing dividends. 2) Excludes new share issue. Länsförsäkring Kronoberg 31 42 124 100 Länsförsäkringar Kalmar län 113 66 270 170 Länsförsäkringar Sak, Group Länsförsäkringar Blekinge 17 28 62 57 2013 2012 2011 2010 2009 Länsförsäkringar Göinge-Kristianstad 40 33 175 126 Premiums earned after ceded Länsförsäkringar Skåne 4 23 480 377 reinsurance, SEK M 4,122 4,024 4,003 3,769 3,524 1) Before bonuses and discounts. Technical result, SEK M 434 304 159 193 460 Operating profit, SEK M 427 486 88 313 635

Länsförsäkringar Bank, Group Credit rating 2013 2012 2011 2010 2009 Deposits from the public, SEK M 69,220 62,396 49,610 41,590 37,365 Long-term Short-term Loans to the public, SEK M 162,003 149,942 134,011 117,910 99,582 Company Agency rating rating Operating profit, SEK M 647 555 385 345 258 Länsförsäkringar AB Standard & Poor’s A–/Stable – Return on equity, % 7 6 5 5 4 Länsförsäkringar AB Moody’s A3/Stable – Tier 1 ratio, Basel II, % 15 14 12 12 12 Länsförsäkringar Bank Standard & Poor’s A/Stable A–1(K–1)

Länsförsäkringar Fondliv Länsförsäkringar Bank Moody’s A3/Stable P–2 1) 2013 2012 2011 2010 2009 Länsförsäkringar Hypotek Standard & Poor’s AAA/Stable – 1) Premium income, SEK M1) 9,473 8,713 6,518 6,345 5,794 Länsförsäkringar Hypotek Moody’s Aaa – Net profit for the year, SEK M 246 128 297 132 20 Länsförsäkringar Sak Standard & Poor’s A/Stable – Managed assets, SEK M 77,517 62,944 52,165 54,032 45,951 Länsförsäkringar Sak Moody’s A2/Stable – 2) Solvency ratio, % 1.7 2.2 2.7 2.0 1.3 Agria Djurförsäkring Standard & Poor’s A–/pi – 1) 1) In accordance with Insurance Sweden’s definition, measured as rolling 12-month figures. Pertains to the company’s covered bonds. 2) pi ratings are ratings that do not involve forecasts but that are based on public information, such as annual reports. Länsförsäkringar Liv, Group 2013 2012 2011 2010 2009 Premium income, SEK M1) 3,388 4,319 13,048 12,893 11,879 Net profit/loss for the year, SEK M 5,174 4,872 –13,063 3,716 18,106 Collective consolidation, % 107 111 109 107 107 Solvency ratio, % 118 113 111 141 137 1) In accordance with Insurance Sweden’s definition, measured as rolling 12-month figures.

länsförsäkringar alliance 2013 3 We are developing our offering – ­close to the customers

increased almost 4% and we surpassed COMMENTS The Länsförsäkringar Alliance developed strongly in 2013. SEK 20 billion in premiums earned. Very Despite extensive storm-related claims, earnings are stable, volume strong investment income contributed to growth has been healthy, particularly for Agria and Business Area Health, operating profit amounting to almost SEK 4 billion. Based on net profit for the year, and we have jointly conducted a number of forward-looking projects. the regional insurance companies will pay Based on net profit for the year, the regional insurance companies will a total of more than SEK 400 M in bonuses pay a total of SEK 400 M in bonuses and discounts to their customers. and discounts to their customers. In the banking operations, business volumes rose SEK 31 billion and profit increased 16%. the world economy however monetary Managed assets in the unit-linked life ­policy will remain expansive during 2014. assurance company rose SEK 15 billion and, in line with volumes rising, our profit- The customers security is our sole task ability is improving. Respect for the customers’ security is Läns- The ongoing work to enhance efficiency försäkringar’s only task, since the custom- and keep costs low is continuing. When we ers are also the principal and the owner. in 2013 outsourced parts of the joint IT This is, and has always been, one of Läns- operations that was one step. However, försäkringar’s fundamental principles that not all of the measures that we are taking also lays the basis for view on the relation- should be seen as cost savings; but just as ship between Länsförsäkringar and our cus- much as offensive ventures that are laying tomers. Tradition and values are rooted in the foundation for future growth. The long- always ensuring what is best for customers term objective is to achieve higher business based on their daily lives. Being customer- volumes with unchanged fixed costs. owned creates the basis for being close, pro- viding the best service and having a local Adjustments to new regulations presence. Länsförsäkringar works in all Adjustments to stricter and more detailed channels and in all customer meetings with banking and insurance regulations are con- We look back on a year of significant fluctu- a brand promise based on closeness. The tinuing. In insurance, the forthcoming Sol- ations in both the stock markets and fixed- perception of greater closeness and less vency II rules entail significant adjustment income markets. Several central banks con- ­distance in the relationship with Läns- requirements. We are continuously making tinued to pursue a highly expansive mone- försäkringar is the guiding principle for the necessary adjustments to the rules to tary policy, while the underlying financial everything we do – from the product devel- further strengthen our internal governance performance was weak. Interest rates were opment to the personal customer meeting. and control. Over the past five years, we low at the start of the year but rose follow- have successively strengthened our risk ing expectations that the Federal Reserve Strong earnings control, regulatory compliance and internal would reduce its bond-buying stimulus. 2013 was a successful year for the Läns- audit functions. Positive signals in Europe and higher growth försäkringar Alliance. Although the year The changed regulations mean stricter in the US contributed to 2013, rather pleas- ended with a number of large storm-related capital requirements for both banking and ingly, turning into a strong year on the stock claims and fires that had a major impact on insurance. The 23 regional insurance com- markets. 18 of Läns­för­säkringar’s best several regional insurance companies, the panies, have a very high level of capitalisa- funds in its range increased more than 20%. Alliance reported a stable technical result. tion which they have had for a long time. We foresee a continually slow recovery of Premium volumes in non-life insurance This provides great security for the Alliance

4 länsförsäkringar alliance 2013 in this time of stricter capital requirements. The jointly owned Länsförsäkringar AB Group on its part needs sufficiently strong capitalisation. In January 2013, the owners – the regional insurance companies – decided to contribute SEK 500 M to strengthen Läns­ försäkringar AB’s financial basis. This capi- tal contribution has primarily been used to strengthen the bank’s capital base in order to meet the new capital adequacy requirements that are being imposed on Swedish banks. The work on making adjustments to the new rules continues to require significant resources. I essentially have a positive view of measures that will result in a healthier financial sector. However, I would like to see a more long-term approach in order for us to have a clear understanding of which rules apply so that we can take action that will result in what the rules are ultimately intended for – that is, increased customer value. The rules for different business opera- bank. 25% of all fund trading takes place tee levels combined with lower fees, tions in the financial systems should also be via the app and a customer logs in to the app which allows a changed investment mix coordinated and harmonised with each other. 30 times a month on average. Continuing with higher expected returns and improved the development of our mobile services is opportunities for future increases in the Challenges ahead fully in line with our promise of always value of savings. The transition will take a The Länsförsäkringar Alliance is jointly being close to the customer – and you can- few years, but I am convinced that we will carrying out a number of forward-looking not get much closer to customers than being succeed – that is how attractive this offer is. development projects, for example, we are in their pockets. The banking operations are continuing to continuing to successfully develop our We are continuing our extensive efforts develop at a controlled rate, with profitabil- mobile services. Customers demand for in the life-assurance and pension market, ity strengthening as an increasing number leading-edge mobile services are increasing where we will significantly raise our profile of customers are choosing more banking at a rapid pace and in this we are at the very in the future and where we have an offering products from our broad range. forefront, for which we have received sev- that is highly competitive. Based on a eral accolades. The digital development is unique approach to advisory services, we Stockholm, March 2014 one of our most important issues for the are now further developing our future life- On behalf of the 23 regional future and is naturally governed by changes assurance and pension offering to corporate insurance companies in needs and behaviour. And the develop- customers and private individuals. We have ment of mobile services is the most rapid. a strong unit-linked life assurance offering We now have more mobile logins than and our existing traditional-management Internet bank logins; each month there are customers have the offer of changing the 4.5 million logins to our app, which is 1 conditions of their insurance to New Trad. Sten Dunér million more than logins to the Internet In brief, this offering involves lower guaran- President, Länsförsäkringar AB

länsförsäkringar alliance 2013 5 This is Länsförsäkringar

försäkringar’s fundamental principles and ABOUT LÄNSFÖRSÄKRINGAR The Länsförsäkringar Alliance is unique in lays the basis for its view of customer rela- the Swedish financial service market. The 23 customer-owned regional tionships. Traditions and values are rooted insurance companies cooperate and combine the ability of a small com- in always ensuring what is best for customers pany to understand customers with the advantages of economies of scale in their daily lives. Being customer-owned generated by an alliance. The brand promise in all channels and in all creates the basis for being close, providing the best service and having a local pres- customer meetings is based on closeness. The perception of greater ence. closeness and less distance in a relationship with Länsförsäkringar is To fully succeed in living up to the cus- the guiding principle for everything – from product development to the tomer-oriented approach, which is the very personal customer meeting. foundation of Länsförsäkringar’s operations, customers must perceive it be natural and advantageous to combine their banking Under a single brand, customers are pro- promise based on closeness. The perception and insurance commitments in their local vided with a complete offering of banking, of greater closeness and less distance in a regional insurance companies. This insurance and real-estate brokerage ser- relationship with Länsförsäkringar is the approach characterises the entire business. vices through 23 independent and cus- guiding principle for everything – from All customer meetings are based on the tomer-owned regional insurance compa- product development to a personal cus- ­customer’s needs regardless of whether nies. Over two centuries, mutuality, close- tomer meeting. The principle of closeness they occur in person or via the telephone ness and local decision-making authority is based on a number of types of closeness, or Internet. have built up the success of the non-life for example, geographic proximity, close- insurance operations and been translated ness of attitude and closeness in terms of Balance between local and shared into the financial and real-estate brokerage decision-making. Understanding and a Together, the Länsförsäkringar Alliance services. The leading position in the non- commitment from the entire Länsförsäkrin- has developed a balance between the small life insurance market has been strength- gar Alliance is required to succeed in creat- and the large-scale. Cooperation between ened. The life-assurance operations have ing clarity in the market about what the the regional insurance companies through a distinct focus on being the best pension brand stands for. It is not enough for only Läns­försäkringar AB has emerged from partner for corporate customers and private employees in customer-facing roles in the a decentralised perspective, not the other individuals over the entire savings period regional insurance companies to known way round. The local companies decided to and also when payments begin. The bank- what the brand promise is; all employees cooperate together to achieve economies of ing operations are growing and the founda- at the jointly owned Länsförsäkringar AB scale and to concentrate on the most impor- tion has been laid for becoming a first need to have such understanding since the tant issue: meetings with customers and choice in banking, particularly for existing mission is to create conditions for the developing close customer relations. Cer- insurance customers. Real-estate brokerage regional insurance companies to succeed tain elements of the Länsförsäkringar Alli- has gone from zero to the third largest bro- in their local customer meetings. ance are conducted on a large-scale to gen- kerage in Sweden in only a few years. This erate economies of scale, for example, the is an example of the strength of the brand Our sole task is customer security development of products and IT systems. and the customer advantages in combining Respect for customers’ security is Läns- Other areas are better suited to being con- all elements of a reliable mortgage transac- försäkringar’s only task, since customers ducted on a smaller scale, such as customer tion in one company. The healthcare area is are also the principal and the owner. Each meetings. Success is found in balancing another strong growth market for the Läns- regional insurance company is owned by its these elements. The basis for cooperation försäkringar Alliance. non-life insurance customers, which means in the Länsförsäkringar Alliance is that as that profit is distributed to customers in the much of the operations as possible are con- Closeness in all customer meetings form of bonuses and no profit is distributed ducted by the local companies and essen- Länsförsäkringar works in all channels and to shareholders in the same way as in a lim- tially all customer contact is to take place in all customer meetings with a brand ited liability company. This is one of Läns- with them. For Länsförsäkringar, the core

6 länsförsäkringar alliance 2013 concept is to meet and know customers, and the regional insurance companies to be suc- brand is a way of living and acting when in this is best achieved on a small scale. This cessful in their respective markets by con- contact with customers and the community is how closeness can be built up in customer ducting business, service and development in general. The brand remains extremely meetings. Local presence is an area that operations, and to assume responsibility strong compared with its competitors in the Länsförsäkringar does not compromise on. for the Länsförsäkringar Alliance’s joint banking, insurance and pension industry. But this does not mean that the develop- strategies. Nordic Brand Academy’s 2013 Reputability ment of a large-scale format will not con- Barometer showed that Länsförsäkringar tinue in other areas. The ultimate goal of the Strong brand and satisfied customers has the highest reputation among banking large-scale approach is to strengthen cus- The regional insurance companies meet and insurance companies. Länsförsäkringar tomer value. Economies of scale arise in the their customers under a single brand, has long held a top ranking in the Swedish cooperation between the regional insurance regardless of whether they are providing Quality Index survey, which measures how companies. Cooperation takes place through insurance, pension savings or banking ser- satisfied customers are with their bank and the jointly owned Länsförsäkringar AB and vices. It demonstrates the strength of the insurance company. its subsidiaries. Länsförsäkringar AB’s task brand, which is the result of consistent and is to create the necessary prerequisites for long-term work on brand and values. The

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D N T N S A A S C T G E E IN ES R E IN L- E F US E B REA IN OR NEW B IC ON TY S V U RI UR ER SE CU AN S S SE CE

The 23 regional insurance companies The regional insurance companies work jointly have 3.5 million customers. together through Länsförsäkringar AB.

länsförsäkringar alliance 2013 7 Owner control

insurance companies. Each of the regional Owner control Internal owner control in the Länsförsäkringar Alliance is insurance companies, as an owner, is part of a multi-faceted interaction between the regional insurance compa- responsible for ensuring that well-function- nies. The regional insurance companies are simultaneously members of the ing owner control is in place vis-à-vis Läns- federation, clients and users of Länsförsäkringar AB’s services, distributors försäkringar AB. The boards of directors of the regional insurance companies are of ­Länsförsäkringar AB’s products and owners of Länsförsäkringar AB. formally respon­sible for owner control. Based on the federal organisation and purpose of the ownership of Länsförsäkrin- In the interaction between the regional Länsförsäkringar AB a greater focal point. gar AB, the regional insurance companies insurance companies, owner control not Owner control has become an increasingly have created joint forms of owner control. only involves controlling the joint opera- imp­or­tant element of the interaction Forms that comply with the requirements tions, but also ensuring that all regional between the regional insurance companies. usually imposed on owner control and that insurance companies assume their share at the same time take into account the fed- of the responsibility for the development Foundations of owner control eral conditions of the cooperation between of the operations in which they have jointly Länsförsäkringar AB is a limited liability the companies. decided to invest in. The development of company and the parent company of a Owner control at Länsförsäkringar AB the joint business and growth plans in financial group, with shares owned has clear advantages compared with that recent years has made the regional insur- individu­ally in various holdings by the 23 of many larger financial groups. This is ance companies owner control vis-à-vis regional insurance companies and 16 local because all the regional insurance compa-

8 länsförsäkringar alliance 2013 Owner control in the Länsförsäkringar Alliance Owner control mainly concerns the relationship between the Boards of the regional insurance companies, Länsförsäkringar AB’s Annual General Meeting, and the regional insurance companies’ owner consortium and Länsförsäkringar AB’s Board of Directors. The owner consortium is not a legal entity but has a central role in this interrelationship.

Customers/owners

23 Board of the regional insurance companies Duties regulated in an agreement between the 23 owners.

Annual General Meetings Owner consortium

Forum for owner control and federative Länsförsäkringar AB’s Board interrelationship.

Länsförsäkringar AB’s subsidiaries’ Boards

nies have the same ownership purpose are Committee appointed by the General Meet- Committee and the Chairman of the Board active and collectively have the financial ing. The Nomination Committee’s composi- is important to maintain process quality and capacity to ensure long-term ownership. tion, mandate period and so forth are gov- avoid polarisation. One example is the erned by the Articles of Association. The Board’s annual evaluation of its own work. Owner-control logic Chairman of the consortium is responsible The evaluation is documented and provided The logic behind owner control centres for the process of renewing the Nomination to the Nomination Committee and thereby mainly on the relationship between the Committee. also comprises the basis of the Nomination boards of the regional insurance companies, The primary task of the Nomination Committee’s evaluation of the Board. Länsförsäkringar AB’s Annual General Committee is to propose the election of Länsförsäkringar AB’s Board serves as Meeting, the regional insurance companies’ members to the Board of Directors of Läns- the representative of the owners within the owner consortium and Länsförsäkringar försäkringar AB. Accordingly, the Nomina- framework of the owners’ intentions. Läns- AB’s Board of Directors. Formal owner tion Committee lays the foundation for con- försäkringar AB’s Board pursues the strate- control takes place through the Annual Gen- trol of Länsförsäkringar AB’s operations. gies and targets agreed on by the owners, eral Meeting, how ever the regional insur- As part of its role, the Nomination Commit- thus executing the owners’ assignments. ance companies’ owner consortium and tee represents the owners and their inten- At the same time, Länsförsäkringar AB’s their representation on Länsförsäkringar tions with Länsförsäkringar AB, and Board has a major responsibility for safe- AB’s Board are also important components. ensures that Länsförsäkringar AB’s Board guarding the capital invested in Läns- The duties of the Annual General Meeting is staffed with the right expertise. försäkringar AB by the regional insurance are formally governed by law and the Arti- The task delegated by the owners’ to the companies. The regional insurance compa- cles of Association. The duties of the con- Nomination Committee is documented in a nies’ assignment to Länsförsäkringar AB’s sortium are governed in the regional insur- separate instruction adopted by the General Board is decided by the consortium and ance companies’ consortium agreement. Meeting. It is important that there is a clear is documented in the Länsförsäkringar Länsförsäkringar AB’s Board is elected boundary between the Nomination Com- ­Alliance’s governance documents. Läns- by the General Meeting, which consists mittee and the Board. The Nomination försäkringar AB’s Board decides on the of representatives of all shareholders. The Committee works independently from the direction and scope of the operations based Board is elected based on a process con- Board on behalf of the owners. At the same on its assignment from the owners. trolled by the owners through a Nomination time, interplay between the Nomination

länsförsäkringar alliance 2013 9 Sustainability at Länsförsäkringar

Background Financial, environmental and social sus- tainability issues have always been a natural part of Länsförsäkringar’s operations rather than a chosen strategy. 23 customer-owned companies that jointly own Länsförsäkrin- gar AB – the entire operations, with the ­single purpose of creating security for its customers and owners. Security involves more than preventing non-life insurance claims – it is just as much a question of financial security in the event of property damage or loss and respect for household financing for bank customers’ personal finances, and a the quality of life and com- fortable retirement of life-assurance and pension-insurance customers. A great com- mitment has thus emerged, with the addi- tional goal of reducing risks and creating security in the environments where these A customer-owned corporation provides people live and work. Länsförsäkringar has a a long-term approach history of commitment that does not always demand something in return. Local efforts The only principal of the regional insur- customer focus, combined with sound are not only designed to benefit local cus- ance companies is their customers. Central business practice. The regional insurance tomers, but also the community at large. concepts such as respect and the customer companies also have a history where com- first have always been natural implications mitment and respect do not always require About the 2013 Sustainability Report of what the regional insurance companies something in return, but where the aim is to For more information about sustainability and are: Customer-owned companies with the benefit society at large. Being a stable and environmental activities, see Länsförsäkringar sole purpose of creating individual secu- secure player is therefore natural. None of AB’s Annual Report, which contains a GRI rity for their customers and owners. Cus- Länsförsäkringar AB’s companies received sustainability report. tomer value is always the guiding principle. any government support in 2013. The operations are based on a genuine

Sustainability at Länsförsäkringar “Being close to our customers and taking a long-term approach to working together with the local community on sustainability issues form a natural part of our operations. It is not merely a chosen strategy for the local customer- owned, regional insurance companies and jointly owned Länsförsäkringar AB – it is an expression of who we are.”

Sten Dunér, President of Länsförsäkringar AB, the Alliance’s jointly owned company

10 länsförsäkringar alliance 2013 Social responsibility

employees in the operations must comply Respect for customers’ money with clearly defined laws, regulations and procedures. They undergo training, primar- Everyday commitment comprises the entire tives at both local and national levels that ily through e-learning and the intranet, but operations from non-life insurance to pen- reduce both claims costs and carbon emis- also in the form of targeted training periods. sion savings and banking services. With sions. By reducing claims costs, premiums Länsförsäkringar conducts continuous train- 700,000 non-life insurance operations can be kept to a minimum. Claims preven- ing programmes in security and money ­divided between three million customers, tion efforts have been conducted for many laundering to raise awareness of financial claims prevention is one of Länsför­säk­ years in the areas of fire and water by the crime risks and how to manage them. ringar’s most important tasks. The objective regional insurance companies and jointly Länsförsäkringar Bank conducts exten- is always the same: to provide financial through Länsförsäkringar AB. Joint efforts sive work to minimise the banking opera- security for individuals and companies. The are aimed at lobbying authorities and pro- tions’ risk of exposure to, or being exploited regional insurance companies work closely fessional associations to formulate building for, financial crime. The banking operations with their own customers and Länsför­ regulations to increase fire and water-dam- analyse risks in this area on a regular basis. säkringar AB to create the right conditions. age safety. Länsförsäkringar AB works in a Transactions are monitored actively to detect similar manner with road safety. Preventing money laundering and the funding of terror- Claims prevention efforts show respect damage also plays an important role in ist activities. Other types of attempted fraud, for customers’ money environmental practices. such as credit card fraud, are also monitored. The Länsförsäkringar Alliance devotes Employees report non-compliance or devia- ­substantial effort to claims prevention. This Mitigating financial crime tions via a joint reporting system. is a natural consequence of what Länsför­ Security for Länsförsäkringar AB is an Länsförsäkringar Bank participates in the säkringar represents. Examples include explicit priority and comprises information Swedish branch of ECPAT, which aims to road safety and health promotion efforts, security, IT security, operational risk, conti- monitor and stop payments for child porno­ and active environmental and climate initia- nuity planning and physical security. All graphy via the Swedish payment system.

Community Responsible investment ­engagement Through its funds, Länsförsäkringar’s firm in this work on responsible invest- Regional insurance companies have been fund company is invested in a large num- ment. The firm’s analysis process is used firmly committed to the development and ber of companies all over the world. The to identify companies that according to growth of local communities for many years. conviction is that those companies with public documentation conduct their opera- All regional insurance companies assist and operations integrated with finance, the tions in contravention of well-established work actively with organisations, clubs, asso- environment and social issues will be the international norms. A total of 50 interna- ciations, sports clubs and the business sector. best investments over time. Länsförsäkrin- tional norms and conventions are included Our long-held aim is to create individual gar Fondförvaltning has signed the United in the model. The fund company continu- security by offering insurance. Yet at the same Nations Principles for Responsible Invest- ously monitors invested companies to time, an important part of our work has also ment (UNPRI). ensure that none contravene these interna- involved minimising risks and creating secu- Working with responsible investments is tional norms and subsequently initiates a rity where people live and work. Efforts that based on the same core values adopted by dialogue with these companies on Läns- benefit not only Länsförsäkringar’s custom- the Swedish government in the international försäkringar Fondförvaltning’s behalf to ers, but also society as a whole. In addition, conventions signed by Sweden in such areas change their actions. Resources will be active prevention work is conducted in the as the environment, human rights, child increased in 2014 to take further steps community with the purpose of creating the labour, labour laws, corruption and inhu- towards integrating sustainability issues best possible living conditions for the people mane weapons. The aim of this work is, into asset management. in the county. Respect for the local commu- based on dialogue, to exert an influence nity is also demonstrated by the long-term on companies that breach internationally respect for pension savers’ money and the accepted conventions and guidelines. If local adaptation of the banking offering. this dialogue is unsuccessful, the companies Long-term efforts are also being made to con- are excluded from Länsförsäkringar’s funds. tribute to research that aims to increase per- Länsförsäkringar Fondförvaltning sonal security and reduce risks in society. works together with an external analysis

länsförsäkringar alliance 2013 11 Employees

provides a large internal labour market and Attractive employer in development opportunities for employees in a diversity of professions. During the ­insurance, banking and year, about 500 vacant positions were ad- vertised internally in the Länsförsäkringar ­real-estate brokerage Alliance. Broad training activities Human Resources issues are handled individually by each company Länsförsäkringar invests in training and skills development for its employees. These in the Länsförsäkringar Alliance, while development and coordination opportunities are available in the local in certain issues take place jointly between the regional insurance regional insurance company and through companies and Länsförsäkringar AB. A shared ambition has long been joint training activities at Länsförsäkringar to advance Länsförsäkringar’s positions as an attractive employer. AB, which primarily offers diplomaed busi- ness training in life-assurance, banking and non-life insurance. Accolades as an attractive employer • Partnership with Mitt Liv (“My Life”), These diploma courses focus on giving University graduates ranked Länsförsäkrin- an organisation that mainly helps women employees the skills needed in a business gar among the top 100 companies that they with foreign backgrounds, who are often context to offer customers products and would like to work for in the category of highly educated, enter the Swedish solutions that meet their requirements. “Ideal Employer” in Universum’s Career labour market. Leadership courses are offered internally Barometer survey. According to the survey, • A principal in Drivhuset’s competition as part of company’s own training activities economics students associate the following for students. Drivhuset helps new entre- and by Eurapco (European Alliance Part- with Länsförsäkringar as an employer: preneurs to start and run their own com- ners Company). Senior-level managers and attractive products and services, success in pany or in other ways put their ideas into specialists are nominated for these training its market, professional training and devel- practice. programmes every year. opment and respect for employees. Such • Recruiting for student pools during term associations also correspond to an internal time and for summer work, and offers of Working environment and health survey in this subject. internships. Employees who act as men- In the areas of working environment and For the eleventh consecutive year, Läns- tors for students. health, the regional insurance companies försäkringar received the award of “The • Recruitment of university graduates for offer their employees’ health care insurance Insurance Industry’s Most Attractive more skilled summer placements. and work professionally with rehabilitation Employer” by economics students who took through rehabilitation insurance or through part in the Corporate Barometer survey. Internal labour market their own arrangements. Exercise and pre- Länsförsäkringar’s banking operations 23 independent regional insurance compa- ventive healthcare are subsidised and many came fifth in the same survey and the real- nies that jointly own Länsförsäkringar AB companies have their own exercise premises. estate brokerage third. Di.se/Din karriär annually assesses the most exciting companies in Sweden for a career. After having been nominated and evaluated from among 300 companies, Länsförsäkringar­ was named a Career Com- pany 2013. The jury’s description of a Career Company is “a company that is committed in its work to be an attractive employer and offers unique challenges and particularly interesting career progression opportunities.” In addition to participating in labour market days at universities and colleges, a variety of activities were conducted within the Länsförsäkringar Alliance to strengthen the employer brand in the recruitment mar- ket, for example:

12 länsförsäkringar alliance 2013 Employee statistics

Permanent employees on December 31 23 regional insurance companies* Länsförsäkringar AB 2013 2012 Average age, managers 2013 2012 2013 2012 Women Men Women Men Women 47 47 45 46 23 länsförsäkringsbolag 2,283 1,959 2,284 1,971 Men 47 48 46 46 Länsförsäkringar AB 876 659 837 673 Mäklarservice 78 43 79 45 23 regional insurance companies* Total number of permanent 2013 2012 employees 5,898 5,889 Gender distribution among ­management and Board Women Men Women Men Permanent employees who President 6 18 7 18 have left and now Management teams 1) 78 111 71 122 work at another Board members 2) 96 135 92 147 Permanent company in the Permanent employees recrui- Länsförsäkringar employees who left Assembly of representatives 3) 433 838 398 885 ted during the year Alliance during the year 2013 2012 2013 2012 2013 2012 Länsförsäkringar AB 23 regional insurance 2013 2012 companies, including Gender distribution among Mäklarservice 205 287 42 29 174 188 ­management and Board Women Men Women Men Länsförsäkringar AB 140 111 8 11 102 115 President 3 7 3 8 Management teams 1) 21 42 20 41 23 regional insurance 2) companies* Länsförsäkringar AB Board members 24 50 19 53 1) Includes union representatives Age range, all employees 2013 2012 2013 2012 2) Regular members including union representatives 0–30 years of age 413 456 126 129 3) Regular members 31–40 years of age 1,091 1,163 423 418 23 regional insurance 41–50 years of age 1,428 1,471 545 515 companies* Länsförsäkringar AB 51–60 years of age 1,148 1,135 383 374 Sickness absence, % 2013 2012 2013 2012 61 years of age and above 269 278 58 74 Total sickness absence as a Average age, women 44 44 44 44 percentage of ordinary working hours 2.9 2.7 2.7 2.7 Average age, men 45 45 45 45 Percentage of total sickness absence pertaining to absence 23 regional insurance companies* during a consecutive period of 2013 2012 absence of 60 days or more 36.4 33.6 34.5 36.3 Female Male Female Male Age range, managers managers managers managers managers 0–30 years of age 3 12 1 2 31–40 years of age 28 58 32 52 41–50 years of age 91 107 93 117 51–60 years of age 63 102 43 102 61 years of age and above 3 17 3 26 Total 188 296 172 299 Total 484 471

Länsförsäkringar AB 2013 2012 Female Male Female Male Age range, managers managers managers managers managers 0–30 years of age 1 3 2 1 31–40 years of age 21 27 19 25 41–50 years of age 38 48 35 40 51–60 years of age 15 32 19 31 61 years of age and above 3 3 2 4 Total 78 113 77 101 Total 191 178

* All statistics for the 23 regional insurance companies include Länsförsäkringar Mäklarservice AB.

länsförsäkringar alliance 2013 13 Environment

Environmental considerations, towards a sustainable society

Länsförsäkringar’s work to reduce the number of claims and reduce the to take further steps towards integrating effects of damage that has already incurred has generated major posi- sustainability issues into asset management. tive environmental effects. A key role is to share this knowledge with Environmental impact of travel customers and describe the other actions Länsförsäkringar is taking Business travel results in emissions of car- to help reduce its impact on the environment. Commitment to environ- bon dioxide, a greenhouse gas that contrib- mental issues contributes to a more ecologically sustainable society. utes to the existing greenhouse effect. To reduce this environmental impact, employees travelling on business are increasingly Insurance product for a non-toxic and contribute to the development of the switching to train travel in accordance with environment local community through greater security the travel guidelines for each company. Länsförsäkringar has developed and pro- and less damage. Many of the regional insurance companies vided recycling insurance for agricultural have their own environmentally friendly customers for several years. This insurance Länsförsäkringar invests responsibly cars for business purposes, such as damage reduces the amount of environmentally Through Länsförsäkringar Fonder, Läns- inspections. For employees who drive for harmful waste and scrap generated by agri- försäkringar invests in a large number of business purposes, several companies offer culture. In 2013, 427 tonnes of hazardous companies all over the world. Those com- Eco-Driving courses for advice about fuel waste, which also includes medicines, and panies with operations that are integrated efficiency and green driving techniques. 5,726 tonnes of scrap, plastic and tires/rub- with finance, the environment and social Telephone or video conference meetings ber from agricultural and rural properties issues will prove the best investments over save both the environment and working were recycled. time. Working with responsible investments hours. is based on the same core values adopted Emissions of environmentally by the Swedish government in the interna- Reduced paper-based communication harmful substances tional conventions signed by Sweden in As an insurance company and bank, Läns- Any form of damage to the environment such areas as the environment, human försäkringar is a major consumer of paper. that can be avoided is important. Every case rights, child labour, labour laws, corruption More than 72 million sheets of paper are of damage impacts the environment in the and inhumane weapons. In this responsible sent to customers each year. A joint target form of energy consumption, decontamina- investment work, the fund company coop- is to increase the percentage of digital doc- tion, transport, material use and waste. erates with an external analysis firm. If uments. The expected reduction in paper According to Länsförsäkringar’s calcula- companies that are subject to lobbying do consumption corresponds to the same tions, a water damage result in 300 kg of not respond or the case does not move in a amount of carbon dioxide emitted by 1,650 carbon dioxide emissions. Transport desirable direction, the company is divested flights between Stockholm and Gothenburg. accounts for 80 kg, dehumidification for 10 and placed on the fund company’s black The use of printing chemicals was also kg and the manufacturing and handling of list. Accordingly, all external managers reduced by 15 tonnes. materials for 210 kg. Accordingly, helping engaged by the fund company must observe customers to avoid damage is an important the black list when managing the fund com- Good Environmental Choice electricity environmental measure. Länsförsäkringar pany’s funds, which means that they are not Many branches in Sweden use electricity has calculated that approximately 25 tonnes permitted to invest in blacklisted compa- with the Good Environmental Choice of carbon dioxide are emitted when a house nies. Companies remain blacklisted until ­designation. In most cases, the branches burns down. In addition to atmospheric they can prove that breaches of conventions are heated with locally generated district emissions from the fire, environmentally have ceased and that the company has intro- heating. Many properties hold certification hazardous substances are released into soil duced sufficiently strong policy. Another from the LEED, Green Building and Envi- and nearby watercourses from the firewater option is to immediately divest the holding ronmentally Classified Building systems. used to extinguish the blaze. Länsförsäkrin- without engaging in any dialogue. The fund gar AB conducts joint damage prevention company has signed the United Nations Supporting research efforts. The purpose is to strengthen Läns- Principles for Responsible Investment (UN The Foundation for Regional Insurance försäkringar’s role in a sustainable society PRI). Resources will be increased in 2014 Companies’ Research Fund provides finan-

14 länsförsäkringar alliance 2013 cial assistance for scientific research into tricity cycle event in Värnamo, purchased ronmental activities and due to these efforts everyday security. Since the early 1990s, an electricity cycle for each office, arranged is increasing the diversity of environmental the Research Fund has financed almost a climate conference for the tenth time and work in our county.” 160 research projects for a combined total sponsored the municipality of Vaggeryd Länsförsäkringar Skåne awards the prize of about SEK 90 M, in such areas as road with flooding barriers for garage ramps. of Car Repair Garage of the Year, based on safety, crime prevention, health and wel- Länsförsäkringar Jönköping was awarded how quickly cars are repaired and the skill fare, climate, the environment, fire, forests, a diploma by the Climate Council: “Läns- of the staff in making repairs with a mini- agriculture and product recycling. försäkringar Jönköping is awarded a com- mum of damage to the environment. The mendation for the positive development of work of the garage is judged and graded Long-term and sustainable its climate adaptation efforts in the county. both during and after repairs are made, in environmental efforts Länsförsäkringar Jönköping is spreading order to encourage partners to provide The regional insurance companies have been knowledge about the importance of envi- ­customers with the best service. ISO 14001-certified for many years. The companies in the Länsförsäkringar Alliance GOOD EXAMPLES follow a joint model that guides their envi- ronmental work. General issues are addressed in joint decision forums and local Partnership with environmental decisions are made by the company itself. This structure provides a energy advisors guarantee for systematic and long-term envi- Customers who need advice or have questions about energy ronmental efforts with a local touch. Envi- in the home can receive assistance from an energy advisor at ronmental audits of all regional insurance the regional insurance companies. Two examples of what an companies are conducted annually. Regular energy advisor can help with are understanding energy decla- audits of environmental practices ensure that rations and discussing options for heating single-family homes. these efforts are continuously developed. Activities throughout Sweden Recycling Länsförsäkringar Göinge-Kristianstad established an environment prize that is insurance awarded to someone who has made a valu- In partnership with Keep Sweden Tidy, able contribution to improving the environ- agricultural customers are offered collec- ment. The prizes can be given to private tion of their hazardous waste and scrap. individuals, associations, sports clubs or school class. This is also the second consec- utive year that Länsförsäkringar Göinge- Kristianstad is awarding the Claims Pre- venter of the Year. The prize is given to a private individual, person, association, Partnership with sports club or school class, who has made exemplary efforts for human life and well- Godsinlösen being or who has prevented major financial Under the partnership with Godsinlösen, losses, displayed tremendous consideration all damaged goods are recycled or reused or moral courage. following consistent procedures. For cus- Länsförsäkringar Stockholm teaches tomers, it means that their damaged goods school classes about environmental toxins are quickly taken care off and for Läns- and pollution in the Baltic Sea together försäkringar it means lower claims costs with the brig Tre Kronor. and environmentally sound handling. Länsförsäkringar Västerbotten works at various levels to raise the lowest level of fire protection in homes. These efforts involve Environmental requirements dialogue with authorities, newsletters send in contracting claims services directly to customers and films posted on YouTube, such as Elda lagom. Länsförsäkringar Skåne works actively to encourage more Through its active involvement in the of its partners to review their environmental work and intro- Climate Council (on the initiative of the duce an environmental policy. Today, no new agreements County Governor), Länsförsäkringar are signed with partners if they are unable to present an Jönköping has, for example, held an elec- environmental policy.

länsförsäkringar alliance 2013 15 Länsförsäkringar

nel reductions have been made for a long is continuing time by and several large insurance compa- nies are working on efficiency by replacing many old insurance systems. While simpler to strengthen work duties are disappearing through stream­lining and automation, the need and competition for highly educated employees with specialist expertise, such as actuaries, its ­position is intensifying. In the long term, the issues of the future structure of the social insurance system and the potential privatisation of parts of NON-LIFE INSURANCE Stable earnings despite large storm- the system are central to the non-life insur- related claims and healthy volume growth summarise the ance industry. Growing concern that social past year. Premiums earned surpassed SEK 20 billion and insurance in Sweden is insufficient has led to more people taking out private insurance the market share further strengthened. in all areas that provide compensation in the event of illness, unemployment, acci- dents, death and retirement. The rising Most of the Länsförsäkringar Alliance’s have now become an attractive target group indebtedness of households also increases non-life insurance business is underwritten to cultivate. Internet usage is continuing the need for these types of insurance. Com- by the respective regional insurance compa- to increase and customers can choose to pany owners also want to ensure that nei- nies. However, some non-life insurance receive electronic documents instead of ther they nor their employees go on long business, for example, animal and health ­letters in the post. Customers handle their periods of sick leave and health care insur- insurance are underwritten by the jointly insurance business themselves when they ance can thus provide greater security. The owned Länsförsäkringar AB’s subsidiaries. have time and when they want to. Increas- accident and health insurance market is Of the Länsförsäkringar Alliance’s total ingly strict regulatory requirements com- expanding, as is the health care insurance premiums earned in non-life insurance bined with more intense competition con- market. Competition is fierce, particularly of SEK 20 billion, SEK 16 billion is in the tinue to impose demands on efficiency in health care insurance where Länsför­ 23 regional insurance companies and the enhancements to reduce operating expenses. säkringar is expanding and remains the remainder in Länsförsäkringar AB Group. Efficiency has been enhanced and person- market leader.

The non-life insurance market The non-life insurance market is expanding steadily and, measured in premiums paid, reached about SEK 66 billion in 2013, rep- Market shares of non-life insurance, Market shares of passenger-car insurance, resenting an increase of SEK 30 billion over share of premiums paid share of number of policies the past ten years. Demand for security is increasing in Sweden and this is reflected in the highest growth taking place in health insurance and that customers are insuring Länsförsäkringar 29.9% their pets to a greater extent. The number If 18.2% Trygg Hansa 16.0% Länsförsäkringar 34.2% of insured households, single-family homes Folksam 15.9% If 24.1% and vacation homes is relatively stable, Moderna 3.3% Folksam 21.4% Captivebolag 2.7% Trygg Hansa 13.6% while the number of passenger-car insur- Dina Federation 2.6% Moderna 3.5% ance policies continues to increase. A pre­ Zürich 1.6% Dina Försäkringar 3.3% Other 9.9% viously clear trend in the Swedish non-life insurance market regarding collaborations between banks, companies and other organ- isations is continuing in new constellations. Länsförsäkringar maintained its position as a leader in The market share of passenger-car insurance rose to The role of insurance brokers is also con- the non-life insurance market, with a market share of 34.2%. Both Länsförsäkringar’s premium portfolio tinuing to strengthen and private customers 29.9%. and the number of policies increased.

16 länsförsäkringar Alliance 2013 Market position to grow and through Agria Djurförsäkring 2013 IN BRIEF Länsförsäkringar is strengthening its mar- Länsförsäkringar held its leading position ket-leader position in essentially all areas with a market share of 59.2% (57.7). Leading market position in the growing non-life insurance market retained and market share and is also particularly strong in the growth Brokered business strengthened to 29.9% (29.5). segments of health care insurance and ani- Länsförsäkringar Mäklarservice enables Premium volumes increased mal insurance. The market share amounted Länsförsäkringar to reach customers who almost 4% and the Läns- choose to be represented by insurance to 29.9% (29.5) measured in premiums försäkringar Alliance surpassed paid. Both premiums earned and the num- ­brokers. The Länsförsäkringar Alliance’s SEK 20 billion in premiums ber of policies rose during the year. Läns- brokered non-life insurance premiums earned. försäkringar continued to increase from a amounted to SEK 1,477 M (1,399) at year- very strong position in commercial insur- end 2013. Solvency strengthened and ance, with a market share of 36.5% (36.3). The Länsförsäkringar Alliance’s bro- the solvency margin was 206% Through its local presence, Länsförsäkrin- kered non-life insurance business amounted (182). gar meets the needs and situation of compa- to 28% of the total non-life insurance port- The technical result declined nies, which is one of the reasons that its folio for commercial insurance. Demand to SEK 1,247 (1,439), primarily position strengthened in most of Sweden. for health and health care insurance is rising attributable to higher costs from sharply. The Länsförsäkringar Alliance’s Accordingly, Länsförsäkringar remains a storms and fires. market leader in property and casualty, brokered Group and Health businesses homeowner, motor third-party liability and amounted to SEK 210 M at year-end 2013. the combined ratio weakened motor hull and animal insurance, measured During the year, Länsförsäkringar to 98% (97). in premium volumes. The number of insur- secured two important group life assurance ance policies in passenger-car insurance procurements, UIG Gruppliv via Max rose, and the market share increased to ­Matthiessen and GU1 via Mercer. 34.2% (33.3), while the market share for In addition to sales efforts, Länsför­ homeowner insurance increased to 39.9% säkringar continued to develop automated (39.4). Competition is also fierce in animal services in brokered business, to improve insurance and many companies have pro- and make the insurance brokers’ self-ser- moted animal insurance as part of their full- vice easier. service offering. The market is continuing

Market shares of household insurance, Market shares of homeowner insurance, Market shares of commercial lines, number of policies number of policies share of premiums paid

Länsförsäkringar 36.5% If 12.4% Trygg Hansa 12.1% Länsförsäkringar 25.1% Länsförsäkringar 39.9% Captivebolag 11.1% Folksam 48.8% Folksam 28.3% Zürich 6.6% Trygg Hansa 11.1% If 12.3% County councils 6.1% If 10.0% Trygg Hansa 10.7% Moderna 3.3% Moderna 3.5% Dina Försäkringar 5.3% Dina Federation 3.2% Dina Försäkringar 1.5% Moderna 3.5% Folksam 2.9% Gjensidige 2.4% Other 3.4%

The market share of household insurance was stable Länsförsäkringar remains a market leader in home- Länsförsäkringar maintained a strong position in its at about 25%. The number of household insurance owner insurance, with a market share of 39.9%. commercial lines with a market share of 36.5%. policies rose during the year.

länsförsäkringar Alliance 2013 17 Insurance lines Capital and investments­

The local regional insurance com- panies and the jointly owned non- life insurance companies in Läns- försäkringar AB strive to retain a strong solvency margin to maintain uniform premium pricing over time. Länsförsäkringar endeavours to achieve a balance between risk and available surplus capital and Motor hull Home prioritises the safeguarding of key figures. In line with the investment Länsförsäkringar further strengthened its The market for home insurance grew 3.8% strategies, a percentage of assets is position in the motor insurance market dur- during the year, measured in premium invested in low-risk interest-bear- ing the year. The motor market reported a income. During the same period, Läns- ing securities to ensure the commit- normal rate of increase but Länsförsäkrin- försäkringar increased its premium income gar’s motor insurance portfolio increased in home insurance by 5.3% and remains ments of the non-life insurance considerably more than this level. Läns- the market leader with 29.2% of the entire operations. At the same time, the försäkringar increases both in the number home-insurance market. Länsförsäkringar strong solvency margin provides of insured passenger cars and in other types is the largest company in homeowner insur- the Länsförsäkringar Alliance with of vehicles. The market share for motor ance, with a market share of 39.8% (39.4). a substantial buffer of capital, third-party liability insurance is now at Länsförsäkringar is also the market leader allowing a certain portion to be more than 35%, measured for all vehicles. in the vacation-home insurance, with a mar- invested in assets with higher anti­ There are several reasons for the strength- ket share of 41.2%. The market share for cipated returns, such as equities. ened position. Continuous work on risk household insurance amounted to 25.1%. adjustment in pricing makes it possible to Tough competition is continuing in the keep prices competitive. The regional insur- home-insurance market in which many ance companies also had enhanced sales insurance companies and banks work focus on motor hull insurance. The Läns- together to strengthen their customer offer- försäkringar Alliance launched a “try out” ing. Partnership agreements are in place insurance via the car dealer channel on a with such players as the retail sector and broader front during the year, which trade unions that offer insurance to their strengthened the offering. customers and members. Claims costs for passenger-car insurance Claims costs for home insurance rose slightly in 2013 compared with the increased 10% during the year. The main preceding year. This was seen particularly reason was the effect of several storms in in glass damage, engine damage, fire and northern and southern Sweden in the salvaging. autumn that caused extensive damage. Sev- eral large fires also impacted claims costs. Motor 2013 2012 Costs for water claims declined but remain Premiums earned, the largest expense item. gross, SEK M 6,660 6,566

Passenger cars, Home 2013 2012 number of policies 1,504,000 1,452,000 Premiums earned, gross, SEK M 3,708 3,424 Passenger cars, market share, % 34.2 33.3 Households, number of policies 770,100 757,700

Other vehicles, Market share, households, % 25.1 24.9 number of policies 1,297,000 1,266,000 Homeowners + home content, Other vehicles, number of policies 677,800 661,300 market share, % 48.5 4.7 Market share, Homeowners + home content, % 39.8 39.4

Vacation homes, number of policies 238,300 238,700

Market share, vacation homes, % 41.2 41.2

18 länsförsäkringar Alliance 2013 Insurance lines

Yacht Commercial Agriculture

The Swedish yacht industry has suffered Länsförsäkringar retained its dominant Länsförsäkringar remained the market considerably from declining sales for sev- position in the commercial lines market. leader in insurance cover for agricultural eral consecutive years and the stock of The market share rose to 36.3% (36.5). A customers. The premium volume rose yachts is continuously decreasing. Läns- new model for premium pricing was intro- slightly more than 4% in 2013. Business is försäkringar is a member of Sweboat, the duced for property insurance. The purpose now in a better balance after several years Swedish Marine Industries Federation, and is to better risk adjust the price and thereby of weaker claims outcome. During the year, through the federation, works on a targeted increase fairness for the various customer customers were the focus in development campaign “Discover boating” which aims groups. of insurance products. Extensive work was to reach new target groups. This campaign Länsförsäkringar Sak supplements the carried out to increase clarity in the formu- was featured at boat trade fairs, in social regional insurance companies’ offering to lation of a selection of insurance terms and media and in film clips on the Internet. corporate customers with specialised casu- conditions, where both the structure and More than 50,000 unique visitors were reg- alty, cargo, motor hull and property insur- language were simplified. New insurance istered. Specialist yacht-insurance compa- ance solutions. The commercial lines mar- cover was also introduced for agricultural nies are continuing their work on brand ket is sensitive to economic trends, with companies, for example a business travel insurance and in many cases offer insurance premiums that in many cases are governed as part of a boat purchase. Länsförsäkringar by company sales and that remain at rela- policy that is now included in the basic has retained the number of insured yachts tively low levels. The price pressure in cover. despite the fierce competition and the cargo insurance stagnated slightly, although Fires remain a problem area and the decline in the total yacht stock. The market there are no indications that premiums are regional insurance companies are working share rose to 29.1% (28.9) and premiums starting to rise. The number of players in the actively both locally and jointly to help cus- earned increased 2.7% in 2013. Theft, pri- market rose again and further price pressure tomers minimise fire risks. Another distinc- marily involving newer types of outboard can thus be expected in the future. Läns- tive feature of the year was a sharp rise in engines remain a cause for concern. New försäkringar’s market share in cargo insur- theft of tractors and agricultural machines. claims-prevention discounts were intro- ance stalled slightly during 2013. duced in 2013 to reward claims-prevention Competition in casualty insurance has AGRICULTURE 2013 2012 Premiums earned, measures and to counteract the negative further intensified with companies that pre- 1,582 1,522 gross, SEK M claims trend. The insurance companies, viously focused only on large companies Agricultural insurance, together with Larmtjänst and the marine now also cultivating the same market seg- 189,350 190,500 number of policies police, also launched “Båtsamverkan,” ments as Länsförsäkringar Sak. Tractor insurance, number of 266,100 255,400 which is similar to the Neighbourhood The interests of the Länsförsäkringar policies Watch scheme, and the scheme has quickly Alliance’s corporate customers in Sweden taken off throughout Sweden. are increasingly international and demand for commercial insurance solutions is YACHT 2013 2012 increasing among both new and existing Premiums earned, 165 159 customers. Through the International Net- gross, SEK M work of Insurance (INI), Länsförsäkringar Yachts, number of policies 81,400 81,500 can offer customised and local insurance Market share, percentage of solutions in more than 100 countries at 29.1 29.0 policies, % competitive prices.

COMMERCIAL 2013 2012

Premiums earned, gross, SEK M 3,678 3,554

Number of policies 233,500 233,100

Market share, Commercial lines, % 36.5 36.3

länsförsäkringar Alliance 2013 19 Agria Djurförsäkring Health

Agria Djurförsäkring (animal insurance) Länsförsäkringar is increasing both pre- form of a health profile, a self-help pro- is a market leader in Sweden, with a market mium volumes and the number of policies gramme and personal counselling for man- share of 58.7% (57.7). in personal-risk insurance. The accident agers and employees. Work-oriented reha- The business area for dogs, cats and and health insurance market is expanding, bilitation and treatment for addiction and other pet insurance continued to grow and and increased by more than SEK 0.5 billion substance abuse is also included in the had a successful year. While the sales trend to SEK 7.6 billion during the year, up insurance policy. This health care insurance during the year was highly favourable, almost 8%. Länsförsäkringar’s market share supports employees in their efforts to achieve claims payments for dog and cat insurance, in accident and health insurance declined better health and helps companies reduce increased alarmingly quickly during the slightly but has been relatively stable in the sickness absence rates. spring months, making an additional pre- past few years at slightly more than 19%. mium adjustment necessary in August. Vet- The health care insurance market also con- HEALTH 2013 2012 Premiums earned, erinary care is being restructured, and mea- tinues to expand, and Länsförsäkringar 1,830 1,575 gross, SEK M sures are being taken in claims adjustment, remains a market leader. At year-end 2013, Market share, accident and the results of which started to be noticeable 573,000 individuals had health care insur- health insurance, premiums 19.4 19.4 during the year. Fewer and larger players are ance, most of which is taken out and paid paid, % influencing the direction, availability and by the employer. Health care insurance, 118,000 111,000 costs in veterinary care. Horse insurance is The introduction of a new generation number of insured parties Agria’s market that is most sensitive to eco- of group insurance policies in health insur- nomic fluctuations, with a slightly declining ance started to generate results. In 2013, portfolio, although Agria is capturing the market positively received modernised shares in the segment in this declining mar- products that provide sound financial basic ket. Horse insurance reported favourable security for companies and employees. The earnings, largely due to a major focus on aim has been to create insurance policies operating expenses and a stable claims cost that are better tailored to current society. level. Brokered sales continue to perform well. The international business continued to Länsförsäkringar both renewed existing and grow in Norway and Denmark. Agria Dyre- underwrote new brokered agreements dur- forsikring is now a leader in animal insur- ing the year, resulting in an increase in the ance in Norway. The Norwegian market portfolio of brokered insurance. A more also faced rapidly rising costs for veterinary comprehensive health care insurance was care in 2013, which had a negative impact launched in 2013. The already popular on earnings. The measures carried out in health care insurance was expanded to the UK branch in 2012 and 2013 improved include preventive health services in the earnings, resulting in profit for the year and contributed to more robust conditions for stable further profitability.

Agria 2013 2012

Premiums earned after ceded 2,043 1,999 reinsurance, SEK M

Market share, % 58.7 57.7

20 länsförsäkringar Alliance 2013 Reinsurance

Business Area Reinsurance in Läns- Alliance also experienced a large number of claims must be consistent, uniform and försäkringar Sak manages the Läns- of fires that impacted earnings for internal fair. For example, language difficulties or försäkringar Alliance’s joint reinsurance reinsurance. Some of these claims were disabilities may affect the customer’s com- cover, consisting of internal Alliance rein- reinsured on the basis of external annual prehension or ability to take action, which surance with a number of pool solutions aggregate cover. is why it is important that Länsförsäkringar and assumed international reinsurance. The Länsförsäkringar Alliance’s reinsur- provides individually adapted service. The The internal reinsurance and the reinsur- ance cover was renewed without any major goal is for Länsförsäkringar’s claims ser- ance jointly procured for the Alliance is changes and at a slightly lower price. The vice to be perceived as flexible and adapted a major asset for Länsförsäkringar and assumed, international reinsurance business to customers’ individual needs. Länsför­ its customers. The system ensures a stable was also renewed without any major changes. säkringar always strives to take measures solution at low cost by distributing risk Contracts that incurred claims were subject and decisions to ensure that customers are within the Läns­försäkringar Alliance and to varying price increases, while prices well-informed of their rights and obligations. procuring external cover for large claims. were reduced in those without claims. In 2013, claims valued at slightly more The reinsurance market suffered from than SEK 10.6 billion were adjusted, of several major claims in 2013. The most which about 38% was motor hull insurance costly were the hailstorms in Germany in Claims adjustment claims. the summer and the floods in the Czech Republic, Germany and Austria. There were Each individual regional insurance com- Autumn storms also several major risk claims and during pany offers a wide range of non-life insur- There were many more claims related to the fourth quarter of the year Northern ance products for private, agricultural and natural catastrophes in the autumn of 2013 Europe experienced four storms: the St. corporate customers and has its own compared with previous years. The combi- Jude storm, Cyclone Hilde, Cyclone Xaver claims-adjustment specialists who provide nation of the four storms, St. Jude storm, and Storm Ivar. Earnings for Länsförsäkrin- claims services in close proximity to cus- Cyclone Hilde, Cyclone Xaver and Storm gar Sak’s assumed reinsurance business tomers. The combination of local strength Ivar, resulted in claims costs of more than were affected by these claims. Typhoon and the ability to jointly utilise resources SEK 500 M, related to damage to both ­Haiyan that hit the Philippines in November and expertise results in high-quality cus- buildings and forests. These storms caused was an enormous humanitarian disaster, but tomer service for all types of claim inci- high workloads at the claims departments did not have a major financial impact on the dents. The local concept ensures swift pro- and the most severely affected regional reinsurance market. cessing by skilled employees located close insurance companies received assistance Despite these claims, prices in the rein- to customers. 1,100 people in the Läns- from other companies through the regional surance market declined slightly since rein- försäkringar Alliance work in the area of insurance companies’ major claims pro- surance companies could report healthy claims adjustment and the international gramme in order to be able to process appli- profits and new players entered the market, ­network of partners also guarantees service cations, carry out inspections and adjust such as hedge funds that underwrite outside Sweden. the many claims submitted. assumed reinsurance. Claims adjustment is an important At the time of writing, the work on pro- The regional insurance companies were means of delivering the product purchased cessing storm-related claims was fully also affected by claims resulting from the by the customer and should be character- under way, and with the excellent work St. Jude storm, Cyclone Hilde and Cyclone ised by active customer service. Claims are based on the extensive expertise and long Xaver and the claims costs from St. Jude adjusted in cooperation with the customer experience of the claims adjustment per- storm are expected to amount to about as soon as possible after the claims have sonnel of the relevant regional insurance SEK 280 M. In 2013, the Länsförsäkringar arisen. A guiding rule is that the adjustment companies, Länsförsäkringar’s customers

länsförsäkringar Alliance 2013 21 can once again feel satisfied with their Claims-prevention work has a broad focus, Approx. Claims cost, choice of insurance company. including constructive and positive dia- CLAIMS no. of SEK M logues with government authorities and Commercial 41,000 2,659 Claims-prevention activities industry organisations regarding such mat- Agriculture 32,000 1,255

Claims-prevention activities are a vital part ters as construction and industry rules, in Home 265,000 2,785 of the operations and the regional insurance which Länsförsäkringar’s expertise in the Accident and health 35,000 300 companies act as important local players in area of building damage claims is highly Yacht 3,000 65 their respective markets. At the same time, sought after. Twitter started to be used as essential joint activities are conducted, and a step in further circulating Länsförsäkrin- Private automotive 291,000 2,685 the focus areas of these joint claims-preven- gar’s claims prevention expertise. Commercial automotive 75,000 1,369 tion activities are road traffic environments Total 742,000 11,118 and fire and water damage. Disaster claims Environmental impact is a large and key Major claims require special resources. The component of all focus areas. Every case Länsförsäkringar Alliance has prepared an of damage impacts the environment in the emergency plan for managing large claims, form of decontamination, waste, transport, and the regional insurance companies also material use and energy consumption. For continuously monitor the risks in their local example, a decrease in the number of fires areas. As part of this work, the Alliance’s contributes to a reduction in carbon emis- competencies in specific subject areas and sions. The greatest impact on the environ- the requirements arising in connection with Service outside ment from water damage is through carbon mass-claims handling are catalogued. Sweden emissions from transport and the buildings The primary purpose of the emergency materials needed for demolishing and plan is to establish a state of preparedness replacing. within the local regional insurance compa- Meeting customer needs Länsförsäkringar has a major commit- nies, and also to coordinate existing across borders ment to raising awareness of road traffic resources. Local cataloguing makes it Increased travel requires that claims- claims and information was provided in a ­easier to organise assistance from other adjustment services be expanded to number of areas during the year. Use of regional insurance companies. The results provide rapid assistance abroad. For map functions to analyse traffic environ- are documented and the emergency plans emergency claims, special resources ments increased during the year and many that are drawn up contain checklists, are required. Accordingly, the Läns- initiatives are in place that analyse traffic descriptions of procedures and a division of försäkringar Alliance has been a major environments and produce improvement responsibility for the work related to major shareholder in SOS International since plans. claims. As a result of all of these prepara- 2003, with a 12% interest. SOS assists customers through both travel and Contractors are offered certification tions, the Länsförsäkringar Alliance is well- vehicle insurance. For example, SOS under a quality development programme equipped and prepared for any major claim helps with breakdown services, refer- and further training to maintain a high qual- that may occur. The emergency plans have rals to car repair garages, baggage ity level and to receive information about been extremely helpful to the regional delays and medical assistance when new findings. Länsförsäkringar also follows insurance companies in their claims work customers suddenly fall seriously ill or up that the correct construction methods are following the tsunami in Southeast Asia, are involved in an accident. SOS Inter- used to ensure safe buildings, which will hurricanes that have hit Sweden and other national processes nearly 10,000 reduce claims in the long term and imposes cases of extensive damage in Sweden. The cases for the Länsförsäkringar Alliance demands on contractors to have quality and plans are continuously developed and every year. environmental plans in place. improved by adding experiences.

22 länsförsäkringar Alliance 2013 Comments on the financial results, Länsförsäkringar Alliance’s non-life insurance

The Länsförsäkringar Alliance’s earnings age in the wake of the storms, claims costs increase was in household and homeowner and key figures for non-life insurance com- were limited through solid external reinsur- insurance, which rose 7% and 8%, respec- prise the sum of the earnings of the 23 inde- ance cover. Cost of recovery from the storms tively, although premium growth in Com- pendent regional insurance companies. The and fire-damage claims amounted to just mercial insurance was strong, particular in Länsförsäkringar Alliance’s operating profit under SEK 400 M. small businesses where the increase totalled strengthened to SEK 3,863 (3,013), mainly The combined ratio for the year 5%. For motor hull insurance, premiums as the result of strong investment income. amounted to 98 (97), of which the claims earned rose approximately 5%, primarily Investment income amounted to SEK 4,441 ratio amounted to 79% (76) and the expense attributable to portfolio increases in both M (3,282). The highly favourable trend in ratio to 19% (21). The increase in the claims motor third-party liability and motor hull the stock markets in 2013, combined with ratio was primarily due to the higher costs insurance. The number of insured vehicles declining interest rates, contributed to the related to the storms and fires. The claims amounted to 2.8 million on December 31 improvement in investment income. trend was more favourable in the areas of and premium income measured in annual The technical result amounted to SEK burglary, theft, robbery and water damage, premiums totalled more than SEK 7 billion. 1,247 (1,439), which was slightly weaker where claims costs have declined compared The Swedish operations in Agria performed mainly due to higher claims costs. Claims to 2012. strongly and the premium volume increased costs rose to SEK 15,589 M (14,549), The Länsförsäkringar Alliance’s sol- almost 12%, while premium volumes in mainly due to the storms that afflicted parts vency capital remained strong in relation to Agria’s international operations declined of Sweden at the end of the year and a rising operating risk. Solvency capital strength- slightly since parts of the UK business are number of fire-damage claims in the first ened by SEK 4,721 M in 2013 to SEK being discontinued. half of the year. Gross claims payments 40,458 M (35,737) and the solvency margin before reinsurance for storm and natural amounted to 206% (182). Premiums earned catastrophes increased by just under SEK increased 3.6% to SEK 20,067 (19,363). 430 M and for fire-damage claims by just The increase was due to both portfolio under SEK 400 M. Despite extensive dam- increases and higher premiums. The largest

NON-LIFE INSURANCE 2013 2012 2011 2010 2009 Premiums earned after ceded reinsurance, SEK M 20,067 19,363 18,756 18,184 17,828 Technical result before bonuses, SEK M 1,247 1,439 856 529 1,688 Operating profit/loss, SEK M 3,863 3,013 –2,273 2,552 5,449 Expense ratio 19 21 21 22 22 Claims ratio 79 76 79 80 74 Combined ratio 98 97 100 102 96 Technical result as a percentage of premiums earned after ceded reinsurance 6 7 5 3 9 Solvency capital, SEK M 40,458 35,737 32,709 34,724 31,747 Solvency margin, % 206 182 171 190 174 Return on equity, % 10 8 –5 8 18

Technical result Combined ratio Solvency SEK M % SEK M % 2,000 120 50,000 250

40,000 220 1,500 110 30,000 190 1,000 100 20,000 160

500 90 10,000 130

0 80 0 100 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Solvency capital, SEK M The weaker technical result for 2013 was mainly The combined ratio declined during the year, Solvency margin, % due to higher claims costs. mainly as a result of higher claims costs for storms and fires. The Länsförsäkringar Alliance has a strong level of sol- vency. Solvency capital amounted to SEK 40,458 M and the solvency margin to 206% at year-end 2013.

länsförsäkringar Alliance 2013 23 Fifth largest

rates and also promises from central banks ­Swedish that monetary policy will be kept expansive for a long period of time. Leading global stock markets posted a strong performance during the year. retail bank The Swedish stock market also displayed a strong trend, while the performance of the stock markets in emerging economies was considerably weaker and more volatile. The bank Länsförsäkringar Bank is one of Sweden’s largest banks and difference between government bond rates and the interest rate for mortgage bonds has favourable growth and very satisfied retail customers. The bank- and other loans declined during the year. ing operations are conducted only in Sweden and business volumes have grown on a broad front in all areas. Strategy and market position Länsförsäkringar Bank is the fifth largest retail bank in Sweden with a business vol- ume of SEK 314 billion. The banking oper- Economic environment and market growth was hampered by debt reduction ations are conducted only in Sweden and In 2013, several of the large economies in in both the public sector and among house- business volumes have grown on a broad front the world implemented significant austerity holds. Several countries pursued an austere in all areas. measures, particularly eurozone countries fiscal policy, while private consumption The strategy is to offer banking services and the US, which kept demand down and was held back by high savings. The pur- to the Länsförsäkringar Alliance’s custom- emerging markets experienced an eco- chase of government and mortgage bonds ers and leverage Länsförsäkringar’s strong nomic downturn. However, monetary pol- by the Federal Reserve continued to impact brand and local presence through the cus- icy remained highly expansive, which con- the market. Bond rates were low at the start tomer-owned regional insurance compa- tributed to an improvement in growth and of the year and subsequently rose gradually, nies. Länsförsäkringar has great potential the value of most classes of assets rose in line with, for example, expectations that to offer banking services to the 3.5 million pending both the future recovery of the real the Federal Reserve would reduce its bond- customers of the Länsförsäkringar Alliance economy and a favourable liquidity situa- buying stimulus, which they also did from based on its already strong customer rela- tion. The stock markets experienced major January 2014. Improved economic indica- tionships. The main target groups are the fluctuations during the year. Performance tors from the US, and also from Europe, 2.9 million retail customers, of which was affected by the highly expansive mone- lent support to rising interest rates. How- 1.8 million are home-insurance and agri­ tary policies of several central banks, while ever, short-term market interest rates re- cultural customers and small businesses. economic trends remained weak. Global mained low as a result of low key interest The aim is, based on low risk, to continue

GDP growth Housing-price trends Household savings % Index 1996 =100 % of disposable income 10 200 16 12 5 150 8 0 4 100 0 –5 –4 –10 50 –8 00 01 02 03 04 05 06 07 08 09 10 11 12 13 05 06 07 08 09 10 11 12 13 98 00 02 04 06 08 10 12 14

Sweden Germany Sweden Norway Sweden Finland Finland US Source: Macrobond Denmark Germany Denmark Norway Source: Macrobond Finland US Source: Macrobond

The Swedish economy displayed a weaker perfor- Swedish housing prices increased in 2013, which Swedish households’ savings are high in relation mance during the year. was largely due to rising prices of tenant-owned to their disposable incomes. apartments.

24 länsförsäkringar alliance 2013 ­Offering

to have growth in volumes and profitability, Savings provide security Trading in equities and other securities is have the most satisfied customers and The bank is growing broadly in the savings growing steadily among customers and the increase the share of customers who have both area and offers a range of different prod- number of deposits rose during the year. banking and insurance with Länsförsäkringar.­ ucts. These products include fund savings Structured products are also offered, such For eight of the past ten years, Läns- in various funds, Investment Savings as equity-linked bonds. The Investment försäkringar Bank has had Sweden’s most Accounts (ISK) that simplify savings in Savings Account (ISK) displayed healthy satisfied retail customers and has more sat- shares, funds and other types of securities, growth during the year, as did Individual isfied customers than its four main competi- equities savings, equity-linked bonds and Pension Savings (IPS). tors, the major banks, according to the 2013 various deposit products. Swedish Quality Index. With a comprehen- The advisory services strive to ensure Lending sive banking and insurance offering at Läns­ that customers have balanced private The bank continues to have favourable försäkringar, customers receive a secure finances in which savings and repayments growth in lending and loans are granted at commitment for their private finances. comprise a key element. low risk. The market share for household The largest portion of the bank’s depos- lending amounted to 5.0%. its, totalling a market share of 4.5%, com- The largest product is retail mortgages, prises household deposits and has risen which comprises 71% of the loan portfo- 2013 in brief stably in recent years. The bank’s percent- lio. Retail mortgages are mostly granted age of market growth in household depos- by Länsförsäkringar Hypotek, which offers Operating profit rose to SEK its was 8% in 2013. mortgages up to 75% of the market value 647 M (555) due to higher net on the granting date, and other mortgages interest income and increased Fund and securities savings are offered by Länsförsäkringar Bank. The commission income. Länsförsäkringar has a market share of bank also offers loans to tenant-owners’ 3.9% of the fund market and the fund associations and to multi-family housing. the cost/income ratio offering includes some 80 funds, of which Länsförsäkringar is the fourth largest improved to 0.63 (0.66). more than 30 are under Länsförsäkringar’s provider of agricultural loans in Sweden. Business volumes increased own brand. The average return for funds The bank’s agricultural loans are primarily 11% to SEK 314 billion (283). during the year amounted to 17%. Valua- targeted to family-owned agricultural tions are carried out continuously to fur- operations that are insurance customers the number of customers rose ther enhance the attractiveness of the with Länsförsäkringar. The percentage 4% to 879,000, the number of funds. of agricultural customers that have both bank cards increased 12% to Länsförsäkringar is to be a leader while banking and insurance with Länsförsäkrin- 388,000. maintaining high quality in sustainable gar was 97% at year-end. On average, agri- Credit losses remained low investments and Länsförsäkringar Fond- cultural lending has small commitments and amounted to SEK 126 M förvaltning has several partnerships for and the percentage of first-lien mortgages (91), net, corresponding to loan consistently working on these issues. amounted to 89%. losses of 0.08% (0.06).

Business volumes and net interest income Customer satisfaction, retail banking

SEK billion SEK M Index 350 2,400 80 300 2,200 250 2,000 60 200 1,800 40 150 1,600

100 1,400 20 50 1,200 0 1,000 0 2009 2010 2011 2012 2013 SEB Mutual funds Agricultural loans Nordea Deposits Other loans Swedbank

Mortgages Net interest income, LänsförsäkringarHandelsbanken Source: Swedish Quality Index SEK M

Business volumes have grown on a broad front and at Länsförsäkringar has very satisfied bank customers an average of 11% over the past five years. Net interest according to the Swedish Quality Index. income has risen at an average of 14% per year over the past five years.

länsförsäkringar alliance 2013 25 Wasa Kredit offers leasing, hire purchase Bank cards and payments ship, owns 10% of the company that and unsecured loans and the growth in lend- The number of bank cards increased 12% to ­manages and develops the service. ing for the year was favourable in a fiercely 388,000 and the card business displayed a competitive market. healthy trend during the year. The number Attractive offering to young people of payment transactions increased 16% to The bank’s offering to young people is Small-business offering 24 million and the number of in-store bank highly competitive and one of the best in The offering to small businesses performed card transactions rose 22% to 15 million. the Swedish market. The card and payment well, particularly due to strong growth in Income from payment mediation continued service offered to young people from the deposits. Deposits from small businesses to increase during the year. age of 16, comprising a young person’s rose 15% to SEK 8.6 billion during the year The Swish service performed well dur- account including a bank card, Internet and and loans to small businesses increased 6% ing the year. Länsförsäkringar Bank, which telephone banking and digital services – to SEK 1.7 billion. is one of the drivers of the Swish partner- performed well during the year.

Bank cards and payment transactions Loans, product distribution

Cards, thousands Transactions, millions 400 200 First-lien retail mortgages First-lien agricultural loans 300 150 Second-lien retail mortgages Unsecured retail loans 200 100 Leasing First-lien mortgages for multi-family housing 100 50 Hire purchase Other agricultural loans 0 0 Industrial and office properties 2009 2010 2011 2012 2013 Other bank loans SEK billion Cards, thousands 0 20 40 60 80 100 120 Payment transactions

The number of bank cards and in-store transactions Nearly 88% of the loan portfolio comprises first-lien mortgages for private housing, agriculture, is steadily increasing. multi-family housing and industrial and office properties.

Market shares of household lending Market shares of deposits in retail market Market shares of fund volumes

Länsförsäkringar 5.0% Länsförsäkringar 4.5% Länsförsäkringar 3.9% Swedbank 24.2% Swedbank 21.0% Robur 27.1% Handelsbanken 22.0% Handelsbanken 17.8% SEB 14.1% SEB 14.8% Nordea 15.8% Nordea 12.4% Nordea 14.0% SEB 11.9% Handelsbanken 11.4% SBAB 6.1% Danske Bank 2.6% AMF pension 3.9% Other 13.9% Skandiabanken 2.4% SPP Fonder 3.9% Other 24.0% Other 23.3%

The market position in household and retail mort- The market position in retail deposits strengthened Länsförsäkringar holds a 3.9% market share of Swedish gages strengthened from 4.9% to 5.0% during the from 4.3% to 4.5% during the year. fund volumes. year. Source: Statistics Sweden Source: SCB Source: Moneymate

26 länsförsäkringar alliance 2013 Loans and credit quality

Credit process housing comprises 71% of the loan portfo- Leasing, hire purchase All loans are granted in Sweden, in SEK and lio. First-lien mortgages with loan-to-value and unsecured loans have a well-diversified geographic distribu- ratios of up to 75% of the market value Leasing, hire purchase and unsecured loan tion. Loan origination is primarily directed account for 92% of retail mortgages. A total products account for 11.5% of the Group’s towards retail mortgages for private individ- of 79% of the collateral for retail mortgages loan portfolio. Leasing and hire purchase uals and small-scale family-owned agricul- comprises single-family homes and 21% are offered by Wasa Kredit and unsecured tural operations with a low risk level. Loan tenant-owned apartments. The average loan loans are offered by both Wasa Kredit and are granted based on standardised and strin- for each borrower is low at SEK 1 million the bank. gent credit regulations, and the credit scor- per borrower and 72% of borrowers have a ing process has integrated system support. loan commitment of up to SEK 2 million. Loans to small businesses In the business model between Länsför­ The weighted average LTV is 67%. Market- Loans to small businesses amounted to säkringar Bank and the regional insurance value analyses of the collateral in retail SEK 1.7 billion at year-end, with SEK 0.9 companies, there is a strong incentive to mortgages are performed continuously and billion pertaining to industrial and office maintain excellent credit quality. a market-value update is performed at least properties and SEK 0.8 billion to operating The system support for credit regulations once per year for all single-family homes credits to small businesses. The business is and loan origination, combined with the and tenant-owned apartments. continuing to be developed and the growth local customer and market knowledge of the First-lien mortgages for multi-family in volumes is taking place while maintain- advisors, provides favourable conditions for housing, primarily to tenant-owners’ asso- ing low risk. consistent loan origination and a loan port- ciations, amounted to slightly less than folio that maintains high credit quality. The 3.5% of the loan portfolio. Impairment and impaired loans credit regulations impose strict requirements The high credit quality of the loan portfolio on customers’ repayment capacity and the First-lien mortgages to is a result of loan origination being based quality of collateral. In connection with agricultural operations on low risk tolerance. Länsförsäkringar has credit scoring, the repayment capacity of A total of 89% of loans to the agricultural a conservative model for impairment and borrowers and households is stress tested segment, which accounts for 13% of the impairment remains at a very low level. and the quality of the loan portfolio and loan portfolio, comprises first-lien mort- Impaired loans, gross, amounted to SEK ­borrowers’ repayment capacity are continu- gages. Other agricultural loans pertain to 393 million, corresponding to a percentage ously monitored and reviewed. The bank has second-lien mortgages and operating cred- of impaired loans gross in relation to loans amortisation requirements on second-lien its. Family-owned agricultural operations of 0.23% at year-end. Impairment mortgages and advises customers to amor- account for 95% of agricultural lending. amounted to SEK 422 million and the tise on their first-lien mortgages. The average commitment for each borrower reserve ratio in relation to loans amounted is low at SEK 1.8 million per borrower. to 0.25%. Loan losses remained low and Mortgages for private individuals Länsförsäkringar’s growth in agricultural amounted to SEK 126 million. The loan Retail mortgages for private individuals’ loans slowed slightly during the year. loss level is low and amounted to 0.08%.

Loans, impaired loans and loan losses Loans, product distribution Mortgages, distribution of commitments

SEK billion % 200 1.00

Mortgages 71% SEK <0.5 M 9% 150 0.75 Agricultural 13% SEK 0.5–1 M 22% Unsecured loans 4% SEK 1–2 M 41% 100 0.50 Leasing 4% SEK 2–3 M 19% Hire purchase 3.5% SEK >3 M 9% 50 0.25 Multi-family housing 3% Industrial and office 0 0.00 properties 0.5% 2009 2010 2011 2012 2013 Other 1%

Loans, SEK billion Loan losses, % Percentage of impaired loans, %

The bank’s loan portolfio has a high level of The loan portfolio primarily comprises retail mortgages The average mortgage commitment amounts to SEK 1.0 credit quality. Impaired loans and loan losses and agricultural loans. million and 72% of mortgages have a commitment of up remain low. to SEK 2 million.

länsförsäkringar alliance 2013 27 Funding and liquidity

Objectives which secures excellent access to long- market was strengthened primarily as a The aim of the funding operations is to term financing. result of the bank’s robust growth in volume ensure that the Group has a sufficiently and customers. This trend demonstrates that strong liquidity position to manage turbu- Diversification deposits increased more as a percentage lent periods in capital markets, when access Since all assets in the balance sheet are in than loans during the year. to funding is limited or even impossible. SEK, the Group has no structural need for The bank’s liquidity risk is controlled and financing in foreign currency. However, the Funding operations limited on the basis of a survival horizon, bank has chosen to conduct a certain por- The Group had highly favourable access to meaning how long all known cash flows can tion of its capital market funding in interna- funding in both the Swedish and international be met without access to capital-market tional markets in an effort to diversify and markets during the year. During the year, the financing. broaden the investor base. In recent years, bank increased the percentage of senior funding has taken place through issuance funding while the percentage of covered Financing sources of Euro Benchmark Covered Bonds, which funding declined. In addition, the bank’s The Group’s main financing sources con- has increased funding diversification and issue volumes in 2013 had a longer average sists of deposits and funding with Läns- strengthened the brand in both the Swedish maturity than maturities in recent years. Cov- försäkringar Hypotek’s covered bonds, and European markets. In addition, diversi- ered bonds were issued at a volume corre- which have the highest credit rating. fication takes place through issuances of sponding to a nominal amount of SEK 22.7 The composition of financing is a natural bonds in primarily NOK and CHF. billion and issuances of EUR, CHF and NOK result of the Group’s business model as a were also launched. During the year, Läns- retail bank with large mortgage lending Refinancing and liquidity försäkringar Bank issued senior unsecured operations. Long-term senior funding and risk management bonds for a nominal amount of SEK 11.4 bil- short-term commercial paper funding takes The bank works pro-actively with its out- lion in the currencies of SEK, EUR and NOK. place in Länsförsäkringar Bank. The bank standing liabilities by repurchasing bonds In 2013, Länsförsäkringar Hypotek endeavours to maintain a sound balance of with short remaining terms against issuance issued three new covered domestic bench- covered and senior funding and all capital of long-term liabilities as a means of man- mark loans. The outstanding volume of market funding is conducted under a num- aging and minimising the liquidity and refi- commercial papers was stable and at year- ber of funding programmes. nancing risk. end, the outstanding volume of the Swedish The single most important source of The market risks that arise in the lending commercial paper programme amounted financing is the Swedish covered bond mar- and funding operations are managed to a nominal SEK 3.1 billion and to a corre- ket, where Länsförsäkringar Hypotek has through derivative instruments. sponding nominal amount of SEK 1.9 bil- a number of outstanding liquid benchmark lion in the international Euro-Commercial bonds. At year-end, Länsförsäkringar Deposits Paper Programme (ECP). Hypotek had six outstanding benchmark The share of deposits in the Group’s total loans with maturities until 2020. financing continued to increase during the Liquidity The Swedish covered bond market is year, amounting to 34% on December 31, The bank’s management of liquidity and one of Europe’s largest and most liquid, 2013. The Group’s position in the deposits financing is characterised by long-term

Financing sources Funding by programme Funding by currency

Covered bonds 48% Swedish covered SEK 73% Deposits 34% Benchmark 52% EUR 21% Senior unsecured EMTCN 24% CHF 4% bonds 11% MTN 16% NOK 2% Equity 4% MTCN 4% Commercial papers 1% EMTN 2% Due to credit DCP 1% institutions 1% Subordinated debt 1%

The largest source of financing in the Group is covered Programme funding primarily takes place with Swedish Programme funding primarily takes place in the bonds, representing 48%. benchmark bonds, representing 52%. ­Swedish market and in SEK.

28 länsförsäkringar alliance 2013 planning and a high level of control. A sat- guaranteed by the government and 1% Hypotek is thus one of four issuers in the isfactory liquidity reserve is in place to deposits with the Swedish National Debt Swedish market for covered bonds with the ensure that sufficient liquidity is always Office. The average Liquidity Coverage highest rating from both Standard & Poor’s available. The management and investment Ratio (LCR) amounted to 230% on Decem- and Moody’s. of the liquidity reserve are conservative ber 31, 2013. The LCR in EUR amounted and take place within the limits established to 1,847% on December 31, 2013. by the Board in the Financial Policy. Maturity structure The liquidity reserve totalled SEK 45.9 Rating SEK billion 30 billion at December 31, 2013, according to Länsförsäkringar Bank’s long-term credit 25 the Swedish Bankers’ Association’s defini- rating is A/Stable from Standard & Poor’s 20 tion. The liquidity reserve is invested in and A3/Stable from Moody’s. The short- 15 securities with very high credit quality, of term credit rating is A–1 from Standard & 10 which 76% comprises Swedish covered Poor’s and P–2 from Moody’s. 5 bonds, 11% other Swedish bonds with a Länsförsäkringar Hypotek’s covered 0 credit rating of AAA/Aaa, 8% Swedish gov- bonds have an unchanged highest rating of 2014 2015 2016 2017 2018 2019 2020 ernment bonds, 4% Finnish government Aaa/Stable from Moody’s and AAA/Stable Covered funding Senior funding bonds in EUR and USD and German bonds from Standard & Poor’s. Länsförsäkringar Commercial papers

Comments on the financial results, Länsförsäkringar Bank

Earnings and profitability interest income. The investment margin tions and costs for building up a shared Profit before loan losses increased 20% to amounted to 1.06% (1.11). backoffice function in the banking opera- SEK 773 M (647) and operating profit rose Net gains from financial items declined tions. The cost/income ratio before loan 16% to SEK 647 M (555), due to higher net to a loss of SEK 86 M (gain: 5) due to the losses strengthened to 0.63 (0.66) and the interest income and increased commission negative effects of changes in fair value and cost/income ratio after loan losses strength- income. Return on equity strengthened to the repurchase of own debt. Commission ened to 0.69 (0.70). 6.7% (6.3). income increased 16% to SEK 1,140 M (984) due to higher income from fund, Loan losses Income card and securities business. Loan losses remained very low and Operating income increased 12% to SEK amounted to SEK 126 M (91), net, corre- 2,104 M (1,882), due to higher net interest Expenses sponding to loan losses of 0.08% (0.06). income and increased commission income. Operating expenses rose 8% to SEK 1,331 Reserves totalled SEK 422 M (325), corre- Net interest income strengthened 8% to M (1,235), primarily due to increased sponding to a reserve ratio in relation to loans SEK 2,230 M (2,071) due to higher vol- depreciation, the fund company’s higher of 0.25% (0.21). Impaired loans amounted to umes, while deposit margins and the return administrative expenses, higher staff costs SEK 393 M (298), corresponding to a per- on equity had a negative impact on net attributable to the finance-company opera- centage of impaired loans of 0.23% (0.19).

INCOME STATEMENT BALANCE SHEET

SEK M 2013 2012 SEK M Dec 31, 2013 Dec 31, 2012 Net interest income 2,230 2,071 ASSETS Net commission expense –253 –385 Treasury bills and other eligible bills 4,881 5,222 Other operating income 126 196 Loans to credit institutions 5,958 2,853 Total operating income 2,104 1,882 Loans to the public 162,003 149,942 Staff costs –427 –397 Bonds and other interest-bearing securities 35,201 32,685 Other administration expenses –790 –737 Intangible assets 397 446 Depreciation/amortisation and impairment of property Property and equipment 12 9 and equipment/intangible assets –114 –102 Other assets 5,007 6,002 Total operating expenses –1,331 –1,235 TOTAL ASSETS 213,459 197,159 Profit before loan losses 773 647 Loan losses, net –126 –91 EQUITY AND LIABILITIES Operating profit 647 555 Due to credit institutions 1,600 1,063 Tax –168 –123 Deposits and funding from the public 69,220 62,396 NET PROFIT FOR THE YEAR 479 433 Debt securities in issue 123,635 114,263 Subordinated liabilities 2,300 1,490 Other liabilities 8,416 10,776 Equity 8,288 7,171 TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES 213,459 197,159

länsförsäkringar alliance 2013 29 ing responsibility in these issues creates Focus on advisory a genuine need for advisory services. Since pension levels will, on average, be lower in relation to final salary than previ- ously, individual savings to finance retire- services – from ment when one is not working will increase. Heightened uncertainty regarding pension levels also contributes to a growing need start to finish for individual supplements. Alecta and AMF hold dominant posi- tions in the procured collective-agreement occupational-pension systems in the private sector (ITP and collective agreement pen- sions SAF/LO) due to monopolies the com- LIFE ASSURANCE AND PENSION INSURANCE Länsförsäkringar is concen- panies had prior to deregulation. By utilis- trating its efforts to meet customers’ growing demands for advice on ing economies of scale, these two compa- how they are to finance their retirement. This involves helping custom- nies have been able to reduce prices to such ers have the right savings and right insurance cover in the years lead- low levels that no other company has been ing up to their retirement and creating a plan for their finances when able to provide any real competition for the they become a pensioner. Extensive efforts are being made to improve desirable position as the “non-choice” com- the offering to customers and opportunities for better long-term pany – for those individuals not making an active choice in collective-agreement pen- returns are being created in traditional management. sions – in the occupational-pension systems above. In the most recent re-selection in the ITP plan, the percentage of individuals not making an active choice a full 40%, and their pension money automatically ended Background vices throughout their entire savings period up with Alecta. The very core of the Swedish pension sys- and also when payments are made in order A consequence of this system is that the tems has changed in the past 20 years. Swe- to achieve better savings. concentration of power via the “faceless den has moved away from a benefit-based capital” in the equities market may shift pension system that not have any guaran- Market even more towards the pension companies tees at all regarding the level of pension in The nature of growth in the pension market with part control of pension funds. This is relation to salary. The consequence of this is changing. The strong growth in the pen- a fact that should be more emphasised in is that the individual assumes the financial sion market in the 1990s and 2000s was the debate on the structure of the pension risk. Studies in the area have shown that largely driven by the deregulation of the there can be significant differences in pen- collective-agreement occupational pension sion levels between individuals with the systems. The deregulation process has now exact same circumstances, depending on mostly been completed, which means that the success of their choice of asset man­ growth will slow down and over time the agement. trend will be related to the general trend in Market share of new sales The heavy dependence of the return level salaries in the Swedish labour market. generated by the capital invested by indi- Alongside this, almost all collective agree- viduals themselves also results in major dif- ment areas over the past six to seven years ferences in pension levels between different have agreed on new models for collective Länsförsäkringar 5.9% agreement pensions, which involves a move Folksam 19.3% age groups. However, the individual free- Skandia 15.9% dom of choice provides an opportunity for from benefit-based to premium-based pen- AMF Pension 11.7% individuals to make their own decisions and sions. These systems are being gradually Alecta 9.4% SEB 7.1% influence the level of their financial secu- introduced over long transition periods, SPP 6.2% Swedbank 5.5% rity. It also presents a business opportunity meaning that the systems will grow Nordea 5.0% for the player who can provide advisory ser- strongly for many years to come. These col- Other 14.0% vices and security for a customer’s entire lective-agreement pension systems provide private finances. The fundamental principle opportunities for individuals to influence of Länsförsäkringar’s efforts in the life- the type of asset management and risk Länsförsäkringar’s total market share in life assur- assurance and pension market is to meet cover, etc. to a varying extent. In other ance, measured in new sales, was 5.9% (7.2). customer needs for individual advisory ser- words, the individual’s successively grow-

30 länsförsäkringar alliance 2013 systems, particular regarding the options pressurising the supplier, meaning the 2013 IN BRIEF for those not making active choices. insurance companies, manage to secure the More and more capital in the life-assur- customer relationship. Net profit for the year for ance market will gradually become trans- Procurement processes, via collective Läns­försäkringar Fondliv ferable and will lead to market players agreements and via brokers, are putting improved to SEK 246 M (128), switching their focus from new sales to pressure on prices and conditions, which in as a result of stronger trend in transferring existing savings. Many of the turn is leading to lower margins per product. the stock market, increased pre- new players in the industry see an opportu- Income from a collective-agreement insur- mium inflows and unchanged nity here for quickly building up their port- ance policy in the ITP area, for example, administration expenses. folio of managed assets. The established fell by two thirds after the most recent pro- Länsförsäkringar Fondliv man- players have the problem that their existing cedure round, compared with the income ages SEK 78 billion on behalf of business models are not optimised for a from the first procurement round. Forth- its life-assurance and pension market in which pension capital is exposed coming procurement processes will also insurance customers. Managed to competition. For example, better match- feature requirements for low fees and assets rose 23% during the year. ing between costs and fees over time is greater clarity on how fees are charged needed, as well as improved customer offers and impact the trend in savings. Sales in unit-linked insurance to retain customers with large capital. amounted to SEK 8 billion, mak- Administrative support systems also need Brokered business ing Länsförsäkringar Sweden’s to be developed to cost efficiently handles The brokered life-assurance business fourth largest unit-linked insur- ance company. the transfer flows between companies. amounted to almost 40% of Länsförsäkrin- The pension market is continuing to gar’s total life-assurance business. Sales fell Länsförsäkringar Liv’s grow, albeit at a lower rate of growth than 11 percent. However, insurance capital in ­solvency ratio improved by 5 per- previously. However, the collective-agree- the brokered life-assurance business has centage points to 118 on Dec­ ment pension market is growing rapidly. continuously risen and reached an all-time ember 31. There is also a greater general need for pri- high of SEK 63 billion (57.6) in 2013. Bro- vate supplements alongside a national pen- kered premium income amounted to SEK sion and an occupational pension. 4,101 M (4,348) and, measured in sales Alongside the large-scale procurements value, to SEK 5,868 M (6,587). During the of collective-agreement occupational pen- year, Länsförsäkringar secured two impor- sions, business is also procured through tant occupational pension procurements, independent insurance brokers. The driving UIG4 via Max Matthiessen and Säkra’s forces behind this trend are the desire to occupational pension procurement. tackle the competition from collective- agreement solutions and a competitive tool between brokers. Those succeeding in best

Occupational pension market, market share of new sales, excluding collective Occupational pension market, total market Private pension market, market share agreements share of new sales of new sales

Länsförsäkringar 10.8% Länsförsäkringar 8.2% Länsförsäkringar 10.3% Skandia 26.6% AMF Pension 17.3% Folksam 24.8% SPP 12.1% Skandia 17.1% Nordea 17.0% SEB 10.6% Folksam 12.1% Handelsbankkoncernen 11.8% Alecta 8.6% Alecta 9.5% Swedbank 11.0% Swedbank 5.3% SEB 8.0% Skandia 9.8% AMF Pension 5.3% SPP 7.7% SEB 5.9% Movestic 4.7%

Länsförsäkringar is the third largest company in the Länsförsäkringar is the total fifth largest company Länsförsäkringar is Sweden’s fifth largest life-assurance occupational pension sub-market, excluding collec- in the occupational pension market. company in the private pension sub-market with a mar- tive agreement pensions, after Skandia and SPP. ket share of 10.3% (10.4).

länsförsäkringar alliance 2013 31 Unit-linked ­insurance

Strong earnings and sharp increase in managed assets

2013 was characterised by a high tempo with many activities and deliver- paid. Capital transferred strengthened pre- ies. All of this work was conducted, together with the regional insurance mium income by SEK 2,627 M (2,342). companies and Länsförsäkringar’s external brokers, to ensure that custom- Premium income for Guarantee Manage- ment amounted to SEK 706 M. Risk insur- ers receive high returns on their savings and have a better understanding ance contributed SEK 43 M in premium of their pension. income. The proprietary sales channels per- formed positively compared with the year- Market savers choosing to start saving in invest- earlier period and increased 8%. Sales in A very large portion of Länsförsäkringar’s ment savings accounts (ISK) instead of in the sub-market of non-collectively agreed new life-assurance sales is for pension solu- insurance. The trend turned around during occupational pensions totalled SEK 7,502 tions for companies that do not have collec- 2013 and life-assurance policies are rising M (7,252). tive agreements. This is a market with a again. New sales in the Swedish life-assur- widespread need for individual advice. A ance market in unit-linked insurance Guarantee Management pension analysis is performed based indi- increased 5% to SEK 75 billion and pre- Guarantee Management is Länsförsäkrin- vidual customer needs, after which the cus- mium income rose 3% to SEK 68 billion. gar’s option for customers seeking a guaran- tomer receives an offer normally compris- tee element to their savings and wishing to ing both pension savings and various insur- Business volumes know the lowest level of their future pay- ance solutions that the customer needs to Insurance capital displayed a very positive ments. The guarantee means that customers lead a financially secure life. Länsförsäkrin- trend and increased 24% to SEK 77.5 bil- are guaranteed to recoup the payments made gar sells proprietary unit-linked insurance lion (62.8). in the savings and with the possibility of solutions through its in-house sales force Total premium income as defined by additional returns, if customers save for at (including franchisees) and insurance bro- Insurance Sweden amounted to SEK 9,473 least ten years. The assets of Guarantee kers. Länsförsäkringar’s total market share M (8,713). The non-collectively agreed Management are divided between equity in unit-linked insurance, measured in sales occupational pensions sub-market and fixed-income investments, with the value, amounted to 10.8% (11.5) in 2013. accounted for 79% of total premium fixed-income element will always be at least New sales in the life-assurance market income. Collective agreement pensions 40% and the equities portion may be as low increased slightly during the year. New represented 5% and the private-pension and as zero. The Asset Management Unit at sales in 2012 declined, largely due to many savings market 16% of total premiums Läns­försäkringar AB manages this product.

32 länsförsäkringar alliance 2013 Comments on the financial results Länsförsäkringar Fondliv

Profit for Länsförsäkringar Fondliv im- expenses is explained by higher selling proved substantially to SEK 246 M (128), expenses attributable to increased volumes. as a result of a stronger trend in the stock Most of Fondliv’s premium flows are market, increased premium inflows and recognised in the balance sheet. Fondliv’s The return for the year was 5.6%. Equities unchanged administration expenses. premium income as defined by Insurance accounted for most of the portfolio’s return; Income from customer fees for unit- Sweden amounted to SEK 9,473 M the main contributors were US equities (3.4 linked insurance contracts rose 16% to (8,713). Premium income in the income percentage points) and European equities SEK 501 M (431). Management remu- statement amounted to SEK 61 M (20). (1.2 percentage points). However, equities neration amounted to SEK 493 M (426), The portion of premiums that contain a in emerging markets slightly negatively up 16%. Operating expenses totalled SEK material insurance risk are recognised as impacted the return. The fixed-income port- 790 M (731). The increase in operating premium income. folio was supplemented with holdings in Investment Grade and High Yield, and reported a neutral performance for the year with a contribution of 0.2 percentage points. INCOME STATEMENT SEK M 2013 2012 Premium income after ceded reinsurance 61 20 Fund management Fees from financial agreements 501 431 Länsförsäkringar’s fund offering comprises Investment income, net 8,309 4,744 30 funds under Länsförsäkringar’s own Claims payments –36 –19 brand and about 45 external funds. The for- Change in technical provisions –8,155 –4,542 mer are found in Länsförsäkringar’s own Operating expenses –790 –731 fund company and are managed by selected Other technical revenue and expenses 512 431 Technical result, non-life insurance operations 401 337 external managers. The external funds pro- Non-technical expenses –1 –4 vide additional breadth and variety in the Profit before tax 400 333 offering and were chosen because they have Tax –153 –205 posted favourable results compared with PROFIT FOR THE YEAR 246 128 other similar funds in the market. 2013 began with sharply rising stock markets and BALANCE SHEET market interest rates. Positive signals in SEK M Dec 31, 2013 Dec 31, 2012 Europe, higher growth in the US, improved ASSETS gains in the companies and a general increase Fixed assets 51 22 in risk willingness provided a healthy basis Other financial investment assets 943 408 for the stock markets during 2013.There Investment assets for which the policyholder bears the investment risk 76,704 62,574 Reinsurers’ portion of technical provisions 3 4 were temporary declines during the year, Receivables 1,154 1,462 driven by political unrest, rising interest Other assets 28 17 rates and relative high share valuations. Prepaid expenses and accrued income 1,025 1,019 Almost 80% of the range performed TOTAL ASSETS 79,908 65,505 ­positively during 2013. The 30 best funds EQUITY, PROVISIONS AND LIABILITIES increased more than 20%. These included Equity 1,694 1,835 funds with an orientation towards the US, Technical provisions 875 426 Swedish small companies and Europe. Technical provisions, Guarantee Management 76,712 62,580 Funds with a negative performance were Provision for taxes 9 2 those investing in emerging markets and Deposits from reinsurers 4 4 commodities that were adversely affected by Liabilities 600 644 Accrued expenses and deferred income 14 15 the weak commodities market, lower export TOTAL EQUITY, PROVISIONS AND LIABILITIES 79,908 65,505 and a weak economic climate. Fixed-income funds struggled to hold their positions in the fluctuating fixed-income climate, and some ended on a minus. The SEK weakened dur- ing the year, which contributed positively to funds investing outside Sweden.

länsförsäkringar alliance 2013 33 Traditional life assurance

New World Continued challenges – high In the New World management form, 30% of the customers’ capital is invested hopes for New Trad in bonds and 70% in Swedish and foreign equities. New World is a traditional insur- ance policy whereby customers are guaran- Länsförsäkringar Liv’s situation improved during the year and a number teed to recoup at least the premiums paid, of measures to reduce risk and strengthen the balance sheet were subject to deductions for expenses and implemented. yield tax. The return in New World during 2013 was favourable, and particularly equi- ties investments in mature markets contrib- Traditional life assurance could be reduced slightly. Rising interest uted to the positive result. The return in Länsförsäkringar Liv conducts traditional rates during 2013 meant that the value trend 2013 amounted to 12.8% (12.2). life assurance divided into four portfolios: in interest-bearing securities was negative. New Trad, Old Trad, New World and On December 2013, asset allocation in the Risks and risk management Insured Pension. Strengthening the key traditionally managed portfolio, Old Trad, One of the key objectives for Läns- figures was the company’s focus in 2013. was as follows: 92% interest-bearing secu- försäkringar Liv is to ensure that the com- Activities in New Trad were an important rities, 4% alternative investments and the pany can meet its guaranteed commitments part of this work. remainder was equities and property. The to customers by a satisfactory margin. return on the various asset classes was as Accordingly, control of risk-taking is an Key figures for Länsförsäkringar Liv follows: Interest-bearing securities negative integrated part of risk management and The solvency ratio improved 5 percentage 3.8% (pos: 6.2), equities 21.6% (1.4), alter- aims to maintain a satisfactory balance points in 2013. The solvency ratio native investments 4.7% (14.2) and proper- between the conditions for generating amounted to 118% (113) on December 31, ties negative 4.0% (pos: 5.1). The bonus returns and the level of risk. 2013. The solvency ratio shows the relation rate was at 0% for most of the year but between total capital and capital guaranteed was raised to 1% from November 1. to the customer, and reflect the company’s capacity to quickly pay out the entire guar- New Trad anteed capital. At the end of May, the first customers were sent offers inviting them to change the con- Old Trad ditions of their insurance product to New Investments in traditional life assurance are Trad. New Trad entails that customers are normally invested in listed equities and offered the opportunity to change the condi- interest-bearing securities, as well as prop- tions of their traditional insurance policies. erties and alternative investments. The mar- Lower guarantee levels combined with ket trend for Länsförsäkringar Liv, with low lower fees allow a changed investment mix interest rates in recent years, entailed that with higher expected returns and improved the investment portfolio was reweighted to opportunities for future increases in the Solvency ratio and collective consolida- protect the company’s key figures and the value of savings. The response has been tion in traditional life assurance savers’ money. Liabilities are discounted by positive and on December 31 slightly more % the market interest rate and thus liabilities than 13,000 customers had accepted the 150 increase when interest rates decline. For offer to change the conditions of their insur- 140 some time now, the investment portfolio ance. The work on contacting and inform- 130 has mainly comprised interest-bearing ing customers is continuing. The invest- 120 investments and the share of equities expo- ment mix comprised 60% interest-bearing 110 sure is low. No major changes were made assets, 30% equities, 5% properties and 5% 100 to the investment mix for Old Trad during alternative investments. The higher element 2009 2010 2011 2012 2013

2013. During the autumn, the company of risk in the New Trad investment portfolio Solvency ratio gradually adjusted the investment portfolio compared with Old Trad also entails higher Collective consolidation, Old Trad to the transition rules for the discount rate expected returns and bonuses. The return The solvency ratio is affected by falling market prior to Solvency II that will come into amounted to 4.3%. The solvency margin in interest rates. However, collective consolidation is effect from January 1, 2014. Accordingly, New Trad was 115% and the bonus rate has not impacted by interest-rate changes. Maintaining collective consolidation requires a balance durations in the fixed-income portfolio been at 5% since the start of May 2013. between investment income and the bonus rate.

34 länsförsäkringar alliance 2013 Comments on the financial results ­Länsförsäkringar Liv

Profit for Länsförsäkringar Liv amounted to Trad also contributed to the positive result. Premium income for Länsförsäkringar Liv SEK 5.2 billion (4.9). The positive earnings The change of conditions to New Trad amounted to SEK 3.4 billion (4.3), down are largely explained by the sharp upturn in means that the guaranteed commitments 22% (34). The insurance portfolio has long-term market interest rates. The Swed- decline, which has a positive effect on lia- declined since new sales was discontinued. ish ten-year government bond rate rose by bilities and earnings. Lower liabilities also External transfers, paid-up insurance and almost 1 percentage point. Liabilities were provide greater scope for investments with no new additions of insurance resulted in discounted by the market interest rate and higher expected returns. the portfolio declining. Payments continued thus the decrease in interest rates contrib- In 2013, the company also worked on to be made for premium paying insurance uted positively to earnings. Technical provi- reducing its operating expenses. The com- policies in the portfolio, but premium sions declined SEK 11.8 billion. However, pany lowered its operating expenses by a income is declining as final insurance pay- investment income in Länsförsäkringar Liv total of 16% during the year. The total ments are made. was negatively impacted by rising market return in Länsförsäkringar Liv’s traditional One-off payments have essentially interest rates since the value of long-term portfolio, Old Trad, was a negative 3.0% ceased since new sales were discontinued, interest-bearing investments declined. The (pos: 6.1) and net investment income which also adversely affected premium positive net earnings due to the increase in included in profit and loss totalled a loss of income. Claims paid amounted to SEK 7.6 interest rates was the result of a deliberate SEK 1.7 billion (pos: 7.7). The total return billion (7.5). Investment assets according to strategy for how assets were matched amounted to 4.3% (–) for New Trad and to the balance sheet fell to SEK 112.8 billion against liabilities. The introduction of New 12.8% (12.2) for New World. (136.5) during the year.

Länsförsäkringar liv, GROUP

INCOME STATEMENT SEK M 2013 2012 Premium income after ceded reinsurance 3,388 4,319 Investment income, net –1,743 7,659 Claims payments –7,645 –7,491 Other technical revenue and expenses – Change in technical provisions 11,842 1,372 Operating expenses –347 –412 Technical result for insurance operations 5,495 5,447 Non-technical expenses –281 –460 Profit before tax 5,214 4,987 Tax –40 –115 PROFIT FOR THE PERIOD 5,174 4,872

BALANCE SHEET SEK M Dec 31, 2013 Dec 31, 2012 ASSETS Property and equipment 1 1 Investment assets 106,777 121,963 Investment assets for which the policyholder bears the investment risk 5,978 14,564 Reinsurers’ portion of technical provisions 605 609 Receivables 2,003 2,370 Other assets 3,708 3,997 Prepaid expenses and accrued income 1,084 1,578 TOTAL ASSETS 120,155 135,083

EQUITY, PROVISIONS AND LIABILITIES Share capital 8 8 Funds and net profit for the period 17,110 13,824 Technical provisions 91,585 104,942 Provisions for life assurance for which the policyholder bears the investment risk 5,978 4,564 Provisions for other risks and expenses 146 176 Deposits from reinsurers 605 609 Liabilities 4,344 10,542 Accrued expenses and deferred income 378 418 TOTAL EQUITY, PROVISIONS AND LIABILITIES 120,155 135,083

länsförsäkringar alliance 2013 35 Comprehensive real-estate Residential properties sold1), ­Länsförsäkringar Fastighetsförmedling

Thousands SEK billion broker­ age­ ­ 20 32

15 24 continues to grow 10 16 5 8

0 0 2009 2010 2011 2012 2013 REAL-ESTATE BROKERAGE Number of residential Through the regional insurance com­ properties sold, thousands panies, Länsförsäkringar Fastighetsförmedling offers a total solution Total value, SEK billion for reliable mortgage transactions: real-estate brokerage, banking The rate of growth in the past year was about and insurance services all in one company. 1,800 units sold, to 15,000 units sold, up 14%. 1) Single-family homes, vacation homes and tenant- owned apartments

Single-family homes and vacation Länsförsäkringar Fastighetsförmedling has form, whereby the regional insurance homes sold with loans deposited with 152 branches throughout Sweden, of which ­company acts as the franchiser for the local Länsförsäkringar Hypotek ten were opened in 2013. Strong growth has branch. This also means that Länsförsäk­ SEK M Number 2,500 1,500 advanced Länsförsäkringar Fastighets- ringar Fastighetsförmedling differs from förmedling to the position of third largest national estate-agent chains by always 2,000 1,200 brokerage in Sweden, with a market share being locally based. A total of 6,090 single- 1,500 900 of 9.5%. After Fastighetsbyrån’s acquisition family homes, 7,950 tenant-owned apart- 1,000 600 of Svensk Fastighetsförmedling, Läns- ments, 1,071 vacation homes and 326 agri- 500 300 försäkringar Fastighetsförmedling will cultural properties were brokered in 2013. 0 0 become the second largest player. The real- The value of the sales amounted to SEK 2009 2010 2011 2012 2013 estate brokerage is an integrated part of the 24.8 billion. In 2013, sales of single-family Loan total, SEK M local regional insurance companies’ full- homes and vacation homes resulted in SEK Number of loans service offering. The aim is always to offer 2.1 billion in first-lien mortgages in Läns- Sales of single-family homes and vacation homes customers a reliable mortgage transaction. försäkringar’s mortgage institution, distri­ resulted in SEK 2.1 billion in first-lien mortgages in Länsförsäkringar Hypotek. The operations are conducted in franchise buted between 1,391 transactions.

Number of single-family homes and Value of sales of single-family homes and Market shares 2013 ­vacation homes sold 2013 vacation homes 2013

SEK billion 30 25 Länsförsäkringar Länsförsäkringar fastighetsförmedling 9.5% fastighetsförmedling 6,901 20 Fastighetsbyrån 24.1% Fastighetsbyrån 17,526 15 Sv. Fastighetsförmedling 16.4% Sv. Fastighetsförmedling 11,897 Mäklarhuset 5.3% Mäklarhuset 3,856 10 Skandiamäklarna 3.9% Skandiamäklarna 2,863 5 Husman & Hagberg 2.9% Husman & Hagberg 2,087 Bjurfors 2.4% Bjurfors 1,745 0 Mäklarringen 1.9% Mäklarringen 1,405 ERA 1.6% ERA 1,184 Bjurfors Other brokers and Other brokers private 32.0% and private 23,177 Mäklarhuset Mäklarringen Fastighetsbyrån Skandiamäklarna Husman & Hagberg

Svensk Fastighetsförmedling Länsförsäkringar Fastighetsförmedling is the third The diagram shows the number of single- The sales value of single-family homes and vacation largest brokerage group in Sweden, measured in family homes and leisure homes that each homes for Länsförsäkringar Fastighetsförmedling Länsförsäkringar Fastighetsförmedling number of single-family homes and vacation homes brokerage has sold according to statistics amounted to SEK 12.4 billion. Tenant-owned apart- sold. Tenant-owned apartments are not included in from the registration authority, meaning ments are not included in the diagram and, including industry statistics. land registration certificates. them, the total value of sales was SEK 23.7 billion.

36 länsförsäkringar alliance 2013 Läns­försäkringar ­Alliance in figures

The combined earnings of the Länsförsäkringar Alliance’s non-life insurance operations are presen- ted first on the following pages. This will be followed by key figures from each of the 23 regional insurance companies.

Content

Länsförsäkringar Alliance, non-life insurance 2013..... 44 Länsförsäkringar Norrbotten ...... 46 Länsförsäkringar Västerbotten ...... 46 Länsförsäkringar Jämtland ...... 46 Länsförsäkringar Västernorrland ...... 47 Länsförsäkringar Gävleborg ...... 47 Dalarnas Försäkringsbolag ...... 47 Länsförsäkringar Värmland ...... 48 Länsförsäkringar Uppsala ...... 48 Länsförsäkringar Bergslagen ...... 48 Länsförsäkringar Stockholm ...... 49 Länsförsäkringar Södermanland ...... 49 Länsförsäkringar Göteborg och Bohuslän ...... 49 Länsförsäkringar Skaraborg ...... 50 Länsförsäkringar Östgöta ...... 50 Länsförsäkringar Älvsborg ...... 50 Länsförsäkringar Gotland ...... 51 Länsförsäkringar Jönköping ...... 51 Länsförsäkringar Halland ...... 51 Länsförsäkring Kronoberg ...... 52 Länsförsäkringar Kalmar län ...... 52 Länsförsäkringar Blekinge ...... 52 Länsförsäkringar Göinge-Kristianstad ...... 53 Länsförsäkringar Skåne ...... 53

länsförsäkringar Alliance 2013 37 Länsförsäkringar Alliance 2013

NON-LIFE INSURANCE, SEK M Result after ceded reinsurance 2013 Norrbotten Västerbotten Jämtland Väster norrland­ Gävleborg Dalarna Värmland Uppsala Bergs lagen­ Stockholm Söder manland­ Premiums earned 288 596 381 390 428 1,018 470 646 897 1,587 472 1,214 563 1,124 944 174 824 543 383 628 260 402 1,714 4,121 20,067 20,067 Investment income transferred from financial operations 21 29 8 16 11 32 12 21 16 62 10 30 14 28 36 5 12 27 5 20 6 7 57 155 645 645 Claims payments –187 –466 –288 –301 –348 –742 –337 –498 –802 –1,349 –400 –897 –453 –907 –713 –123 –673 –458 –283 –425 –199 –295 –1,505 –2,940 –15,589 –15,589 Operating expenses –56 –110 –74 –82 –91 –161 –97 –132 –156 –341 –91 –231 –96 –239 –185 –36 –135 –97 –74 –109 –51 –74 –263 –903 –3,886 –3,886 Other income/expenses – – – – – – 2 – – – – 7 0 – – – – – – – – – – 1 10 10 Technical result from non-life insurance operations before bonuses and discounts 66 49 27 24 0 147 50 37 –44 –41 –9 122 28 6 82 20 28 16 31 113 17 40 4 434 1,247 1,247 Bonuses and discounts – –45 0 – – –232 – –1 – – – – – 0 –23 – – – –24 –65 – –100 3 – –488 –488 Technical result, non-life insurance operations 66 4 27 24 0 –85 50 36 –44 –41 –9 122 28 6 59 20 28 16 7 48 17 –61 6 434 759 759 Total investment income 87 264 102 62 50 338 92 124 300 252 186 393 77 397 473 64 270 184 111 196 65 159 582 350 4,441 4,441 Investment income transferred to insurance operations –21 –29 –8 –16 –11 –32 –12 –21 –16 –62 –10 –30 –14 –28 –36 –5 –12 –27 –5 –20 –6 –7 –57 –155 –645 –645 Other income/expenses –6 –16 –18 –30 –24 –6 –17 –19 –21 –118 –15 –39 –23 –23 –40 0 –36 –45 –12 –19 –14 –16 –48 –87 –692 –310 Operating profit 125 222 103 40 16 214 112 120 219 30 152 446 68 352 456 80 250 128 100 206 62 75 483 542 3,863 4,244

Balance sheet, Dec 31, 2013 ASSETS Investment assets Shares in Länsförsäkringar AB 211 561 373 458 514 1,003 335 714 827 1,416 555 969 455 1,108 977 131 798 550 344 506 206 534 1,457 – – – Other shares and participations 357 1,039 469 293 38 2,035 288 585 1,385 685 1,032 2,528 411 1,851 2,387 403 1,053 926 609 896 353 741 2,835 13,370 37,342 25,199 Bonds and other interest-bearing securities 386 983 590 463 568 1,606 438 771 866 1,853 543 1,150 571 1,363 863 206 827 658 400 703 487 613 1,447 11,802 30,156 65,996 Other investment assets 6 300 97 23 36 132 231 28 590 1 10 28 121 887 59 434 702 320 133 409 92 264 302 2,501 7,315 8,392 Total investment assets 960 2,882 1,529 1,237 1,156 4,775 1,291 2,099 3,668 3,954 2,141 4,675 1,558 5,208 4,287 783 3,381 2,454 1,486 2,514 1,138 2,152 6,041 27,673 74,813 99,588 Reinsurers’ portion of technical provisions 122 238 208 238 152 409 151 267 166 326 185 248 170 349 295 80 350 430 169 196 125 203 877 7,205 7,205 7,205 Receivables and other assets 130 244 179 165 195 406 177 311 345 555 174 378 208 478 419 69 301 188 139 216 123 145 581 1,612 7,739 263,567 Cash and bank balances 28 139 122 25 248 158 534 96 235 50 53 113 60 68 178 140 356 27 87 126 27 20 568 1,391 4,849 4,984 Prepaid expenses and accrued income 15 37 22 18 15 67 16 26 25 37 18 56 16 43 8 18 16 22 11 22 5 18 55 307 893 4,520 Total assets 1,254 3,540 2,060 1,683 1,766 5,815 2,170 2,799 4,439 4,922 2,572 5,469 2,012 6,146 5,186 1,090 4,405 3,121 1,893 3,075 1,418 2,538 8,122 38,187 95,500 379,863

EQUITY AND LIABILITIES Equity 464 1,824 948 625 375 2,653 925 1,081 1,992 412 1,183 2,476 282 2,986 2,698 571 1,922 1,314 815 1,505 653 1,201 2,979 14,227 33,386 34,343 Untaxed reserves – – – – 358 – – – – 1,156 – – 414 – – – – – – – – – – – – – Technical provisions (before ceded reinsurance) 597 1,253 841 872 876 2,509 893 1,291 1,641 2,825 1,037 2,261 1,110 2,266 1,872 386 1,809 1,356 820 1,148 563 999 3,906 20,753 47,929 47,929 Other provisions and liabilities 151 373 214 165 149 540 271 335 673 297 339 669 115 850 479 127 644 356 246 409 188 323 1,149 2,352 11,837 291,138 Accrued expenses and deferred income 43 91 58 21 8 114 80 92 132 232 13 64 92 44 136 6 30 96 11 13 14 15 88 856 2,348 6,453 Total equity and liabilities 1,254 3,540 2,060 1,683 1,766 5,815 2,170 2,799 4,439 4,922 2,572 5,469 2,012 6,146 5,186 1,090 4,405 3,121 1,893 3,075 1,418 2,538 8,122 38,187 95,500 379,863

Solvency capital 574 2,088 1,113 701 787 3,079 1,129 1,309 2,418 1,746 1,411 2,949 758 3,592 3,110 651 2,230 1,567 990 1,797 774 1,439 3,706 14,767 40,458 41,518 Solvency margin 195 334 288 176 183 296 233 198 259 109 293 240 132 307 321 365 263 281 248 281 289 351 213 365 206

The Länsförsäkringar Alliance comprises 23 local and customer-owned Earnings from the Länsförsäkringar Alliance’s non-life insurance opera- regional insurance companies and the jointly owned Länsförsäkringar tions consist of the total earnings of the 23 regional insurance compa- AB. The Länsförsäkringar Alliance is not a Group in the legal sense of the nies and the Länsförsäkringar AB Group, excluding Länsförsäkringar term. Most of the non-life insurance business in the Alliance is under- Fondliv and the Länsförsäkringar Bank Group. The holdings and change written by the regional insurance companies. The business conducted in value in the Länsförsäkringar AB share and transactions between the by Länsförsäkringar AB’s non-life insurance Group comprises health regional insurance companies and the Länsförsäkringar AB Group have insurance, animal insurance, ceded and assumed reinsurance as well been eliminated. The 23 regional insurance companies and the Länsför- as cargo insurance and some casualty, property and motor hull insu- säkringar AB Group apply the approved International Financial rance. Reporting Standards (IFRS).

38 länsförsäkringar Alliance 2013 Bohuslän

NON-LIFE INSURANCE, SEK M Result after ceded reinsurance 2013 Söder manland­ Göteborg och ­ Skaraborg Östgöta Älvsborg Gotland Jönköping Halland Kronoberg Kalmar Blekinge Göinge-Kristianstad Skåne LänsförsäkringarBank & Fondliv AB Group excl.Länsförsäkringar non-life insurance Alliance, Länsförsäkringar Alliance Premiums earned 288 596 381 390 428 1,018 470 646 897 1,587 472 1,214 563 1,124 944 174 824 543 383 628 260 402 1,714 4,121 20,067 20,067 Investment income transferred from financial operations 21 29 8 16 11 32 12 21 16 62 10 30 14 28 36 5 12 27 5 20 6 7 57 155 645 645 Claims payments –187 –466 –288 –301 –348 –742 –337 –498 –802 –1,349 –400 –897 –453 –907 –713 –123 –673 –458 –283 –425 –199 –295 –1,505 –2,940 –15,589 –15,589 Operating expenses –56 –110 –74 –82 –91 –161 –97 –132 –156 –341 –91 –231 –96 –239 –185 –36 –135 –97 –74 –109 –51 –74 –263 –903 –3,886 –3,886 Other income/expenses – – – – – – 2 – – – – 7 0 – – – – – – – – – – 1 10 10 Technical result from non-life insurance operations before bonuses and discounts 66 49 27 24 0 147 50 37 –44 –41 –9 122 28 6 82 20 28 16 31 113 17 40 4 434 1,247 1,247 Bonuses and discounts – –45 0 – – –232 – –1 – – – – – 0 –23 – – – –24 –65 – –100 3 – –488 –488 Technical result, non-life insurance operations 66 4 27 24 0 –85 50 36 –44 –41 –9 122 28 6 59 20 28 16 7 48 17 –61 6 434 759 759 Total investment income 87 264 102 62 50 338 92 124 300 252 186 393 77 397 473 64 270 184 111 196 65 159 582 350 4,441 4,441 Investment income transferred to insurance operations –21 –29 –8 –16 –11 –32 –12 –21 –16 –62 –10 –30 –14 –28 –36 –5 –12 –27 –5 –20 –6 –7 –57 –155 –645 –645 Other income/expenses –6 –16 –18 –30 –24 –6 –17 –19 –21 –118 –15 –39 –23 –23 –40 0 –36 –45 –12 –19 –14 –16 –48 –87 –692 –310 Operating profit 125 222 103 40 16 214 112 120 219 30 152 446 68 352 456 80 250 128 100 206 62 75 483 542 3,863 4,244

Balance sheet, Dec 31, 2013 ASSETS Investment assets Shares in Länsförsäkringar AB 211 561 373 458 514 1,003 335 714 827 1,416 555 969 455 1,108 977 131 798 550 344 506 206 534 1,457 – – – Other shares and participations 357 1,039 469 293 38 2,035 288 585 1,385 685 1,032 2,528 411 1,851 2,387 403 1,053 926 609 896 353 741 2,835 13,370 37,342 25,199 Bonds and other interest-bearing securities 386 983 590 463 568 1,606 438 771 866 1,853 543 1,150 571 1,363 863 206 827 658 400 703 487 613 1,447 11,802 30,156 65,996 Other investment assets 6 300 97 23 36 132 231 28 590 1 10 28 121 887 59 434 702 320 133 409 92 264 302 2,501 7,315 8,392 Total investment assets 960 2,882 1,529 1,237 1,156 4,775 1,291 2,099 3,668 3,954 2,141 4,675 1,558 5,208 4,287 783 3,381 2,454 1,486 2,514 1,138 2,152 6,041 27,673 74,813 99,588 Reinsurers’ portion of technical provisions 122 238 208 238 152 409 151 267 166 326 185 248 170 349 295 80 350 430 169 196 125 203 877 7,205 7,205 7,205 Receivables and other assets 130 244 179 165 195 406 177 311 345 555 174 378 208 478 419 69 301 188 139 216 123 145 581 1,612 7,739 263,567 Cash and bank balances 28 139 122 25 248 158 534 96 235 50 53 113 60 68 178 140 356 27 87 126 27 20 568 1,391 4,849 4,984 Prepaid expenses and accrued income 15 37 22 18 15 67 16 26 25 37 18 56 16 43 8 18 16 22 11 22 5 18 55 307 893 4,520 Total assets 1,254 3,540 2,060 1,683 1,766 5,815 2,170 2,799 4,439 4,922 2,572 5,469 2,012 6,146 5,186 1,090 4,405 3,121 1,893 3,075 1,418 2,538 8,122 38,187 95,500 379,863

EQUITY AND LIABILITIES Equity 464 1,824 948 625 375 2,653 925 1,081 1,992 412 1,183 2,476 282 2,986 2,698 571 1,922 1,314 815 1,505 653 1,201 2,979 14,227 33,386 34,343 Untaxed reserves – – – – 358 – – – – 1,156 – – 414 – – – – – – – – – – – – – Technical provisions (before ceded reinsurance) 597 1,253 841 872 876 2,509 893 1,291 1,641 2,825 1,037 2,261 1,110 2,266 1,872 386 1,809 1,356 820 1,148 563 999 3,906 20,753 47,929 47,929 Other provisions and liabilities 151 373 214 165 149 540 271 335 673 297 339 669 115 850 479 127 644 356 246 409 188 323 1,149 2,352 11,837 291,138 Accrued expenses and deferred income 43 91 58 21 8 114 80 92 132 232 13 64 92 44 136 6 30 96 11 13 14 15 88 856 2,348 6,453 Total equity and liabilities 1,254 3,540 2,060 1,683 1,766 5,815 2,170 2,799 4,439 4,922 2,572 5,469 2,012 6,146 5,186 1,090 4,405 3,121 1,893 3,075 1,418 2,538 8,122 38,187 95,500 379,863

Solvency capital 574 2,088 1,113 701 787 3,079 1,129 1,309 2,418 1,746 1,411 2,949 758 3,592 3,110 651 2,230 1,567 990 1,797 774 1,439 3,706 14,767 40,458 41,518 Solvency margin 195 334 288 176 183 296 233 198 259 109 293 240 132 307 321 365 263 281 248 281 289 351 213 365 206

länsförsäkringar Alliance 2013 39 Länsförsäkringar Länsförsäkringar Länsförsäkringar Norrbotten Västerbotten Jämtland

President President President Kjell Lindfors Göran Spetz Pia Sandvik Board Chairman Board Chairman Board Chairman Mats Fabricius Conny Sandström Tomas Eriksson

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 125 92 and discounts, SEK M 268 217 and discounts, SEK M 103 73 Total assets, SEK M 1,254 1,150 Total assets, SEK M 3,540 3,181 Total assets, SEK M 2,060 1,897 Solvency margin, % 195 158 Solvency margin, % 334 327 Solvency margin, % 288 269 Number of employees 71 71 Number of employees 165 159 Number of employees 104 109 Number offices 3 4 Number offices 3 3 Number offices 5 5

Bank Bank Bank Deposits, SEK M 725 632 Deposits, SEK M 2,897 2,606 Deposits, SEK M 1,377 1,241 Loans, SEK M 284 291 Loans, SEK M 1,169 1,138 Loans, SEK M 936 969 Retail mortgages, SEK M 1,444 1,279 Retail mortgages, SEK M 3,765 3,326 Retail mortgages, SEK M 2,021 1,974 Fund volumes managed, SEK M 70 57 Fund volumes managed, SEK M 561 388 Fund volumes managed, SEK M 103 81 Number of customers 8,400 7,900 Number of customers 25,400 23,800 Number of customers 13,900 13,500

Life assurance Life assurance Life assurance Premium income, SEK M 122 122 Premium income, SEK M 225 246 Premium income, SEK M 120 129 Total insurance capital, SEK M 2,018 1,954 Total insurance capital, SEK M 3,982 3,833 Total insurance capital, SEK M 2,083 2,014 Number of customers 19,100 19,300 Number of customers 34,600 34,700 Number of customers 19,800 19,900

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 288 284 Premiums earned, SEK M 596 558 Premiums earned, SEK M 381 378 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 66 21 operations, SEK M 49 65 operations, SEK M 27 14 Combined ratio after ceded Bonuses and discounts, SEK M –45 –41 Combined ratio after ceded reinsurance, % 85 100 Combined ratio after ceded reinsurance, % 95 99 Total return on asset reinsurance, % 97 92 Total return on asset management, % 10 14 Total return on asset management, % 7 6 Number of customers 58,400 57,800 management, % 10 8 Number of customers 55,200 54,900 Number of customers 110,900 108,200

40 länsförsäkringar Alliance 2013 Länsförsäkringar Länsförsäkringar Dalarnas Västernorrland Gävleborg Försäkringsbolag

President President President Leif Johanson Per-Ove Bäckström Anders Grånäs Board Chairman Board Chairman Board Chairman Stig Högberg Mats Åstrand Maria Engholm

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 40 44 and discounts, SEK M 16 66 and discounts, SEK M 446 337 Total assets, SEK M 1,683 1,642 Total assets, SEK M 1,766 1,639 Total assets, SEK M 5,815 5,321 Solvency margin, % 176 163 Solvency margin, % 183 182 Solvency margin, % 296 284 Number of employees 117 115 Number of employees 147 153 Number of employees 262 260 Number offices 5 5 Number offices 7 7 Number offices 7 7

Bank Bank Bank Deposits, SEK M 1,252 1,163 Deposits, SEK M 1,819 1,626 Deposits, SEK M 3,843 3,427 Loans, SEK M 470 457 Loans, SEK M 965 978 Loans, SEK M 1,368 1,424 Retail mortgages, SEK M 1,676 1,511 Retail mortgages, SEK M 3,884 3,626 Retail mortgages, SEK M 6,003 5,448 Fund volumes managed, SEK M 198 161 Fund volumes managed, SEK M 183 144 Fund volumes managed, SEK M 469 393 Number of customers 21,800 21,400 Number of customers 21,600 20,600 Number of customers 39,000 37,300

Life assurance Life assurance Life assurance Premium income, SEK M 163 177 Premium income, SEK M 177 191 Premium income, SEK M 358 390 Total insurance capital, SEK M 3,428 3,346 Total insurance capital, SEK M 3,269 3,153 Total insurance capital, SEK M 6,232 5,884 Number of customers 27,400 27,500 Number of customers 32,100 32,300 Number of customers 50,800 50,800

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 390 380 Premiums earned, SEK M 428 420 Premiums earned, SEK M 1,018 994 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 24 25 operations, SEK M 0 38 operations, SEK M 147 100 Combined ratio after ceded Combined ratio after ceded Bonuses and discounts, SEK M –232 –137 reinsurance, % 98 98 reinsurance, % 102 94 Combined ratio after ceded Total return on asset Total return on asset reinsurance, % 88 92 management, % 5 5 management, % 4 4 Total return on asset Number of customers 70,100 70,100 Number of customers 82,400 82,800 management, % 7 6 Number of customers 144,200 142,700

länsförsäkringar Alliance 2013 41 Länsförsäkringar Länsförsäkringar Länsförsäkringar Värmland Uppsala Bergslagen

President President President Ulf W Eriksson Ann-Christin Norrström Mikael Sundquist Board Chairman Board Chairman Board Chairman Patrik Sandin Björn Sundell Bengt-Erik Lindgren

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 112 92 and discounts, SEK M 121 132 and discounts, SEK M 219 260 Total assets, SEK M 2,170 2,002 Total assets, SEK M 2,799 2,628 Total assets, SEK M 4,439 4,051 Solvency margin, % 233 230 Solvency margin, % 198 190 Solvency margin, % 259 251 Number of employees 102 102 Number of employees 183 193 Number of employees 233 226 Number offices 4 4 Number offices 6 6 Number offices 7 7

Bank Bank Bank Deposits, SEK M 1,086 939 Deposits, SEK M 3,034 2,824 Deposits, SEK M 4,338 3,792 Loans, SEK M 524 501 Loans, SEK M 1,496 1,500 Loans, SEK M 3,504 3,367 Retail mortgages, SEK M 1,633 1,422 Retail mortgages, SEK M 6,042 5,430 Retail mortgages, SEK M 7,833 6,862 Fund volumes managed, SEK M 93 75 Fund volumes managed, SEK M 320 247 Fund volumes managed, SEK M 373 275 Number of customers 10,900 10,100 Number of customers 28,700 27,400 Number of customers 42,300 38,500

Life assurance Life assurance Life assurance Premium income, SEK M 147 157 Premium income, SEK M 380 388 Premium income, SEK M 541 534 Total insurance capital, SEK M 2,887 2,808 Total insurance capital, SEK M 6,331 5,966 Total insurance capital, SEK M 7,957 7,522 Number of customers 26,200 26,300 Number of customers 50,400 50,600 Number of customers 61,600 61,500

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 470 437 Premiums earned, SEK M 646 618 Premiums earned, SEK M 897 844 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 50 46 operations, SEK M 37 63 operations, SEK M –44 77 Bonuses and discounts, SEK M –21 –21 Bonuses and discounts, SEK M –1 –1 Bonuses and discounts, SEK M – –77 Combined ratio after ceded Combined ratio after ceded Combined ratio after ceded reinsurance, % 92 92 reinsurance, % 98 94 reinsurance, % 107 92 Total return on asset Total return on asset Total return on asset management, % 6 5 management, % 6 6 management, % 9 8 Number of customers 87,200 83,900 Number of customers 113,600 111,800 Number of customers 173,300 166,900

42 länsförsäkringar Alliance 2013 Länsförsäkringar Länsförsäkringar Länsförsäkringar Stockholm Södermanland Göteborg och Bohuslän

President President President Fredrik Bergström Anna-Greta Lundh Ingemar Larsson Board Chairman Board Chairman Board Chairman Christer Villard Axel von Stockenström Sune Nilsson

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 30 100 and discounts, SEK M 152 129 and discounts, SEK M 446 290 Total assets, SEK M 4,922 4,609 Total assets, SEK M 2,572 2,367 Total assets, SEK M 5,469 4,974 Solvency margin, % 109 107 Solvency margin, % 293 272 Solvency margin, % 240 216 Number of employees 391 452 Number of employees 127 127 Number of employees 305 295 Number offices 8 16 Number offices 4 4 Number offices 10 10

Bank Bank Bank Deposits, SEK M 6,852 6,497 Deposits, SEK M 1,776 1,575 Deposits, SEK M 3,951 3,532 Loans, SEK M 1,674 1,753 Loans, SEK M 744 674 Loans, SEK M 1,337 1,289 Retail mortgages, SEK M 16,566 15,277 Retail mortgages, SEK M 3,908 3,394 Retail mortgages, SEK M 7,249 6,616 Fund volumes managed, SEK M 759 654 Fund volumes managed, SEK M 162 129 Fund volumes managed, SEK M 384 299 Number of customers 81,400 79,800 Number of customers 18,900 17,800 Number of customers 44,600 42,500

Life assurance Life assurance Life assurance Premium income, SEK M 2,744 2,918 Premium income, SEK M 199 207 Premium income, SEK M 1,057 1,091 Total insurance capital, SEK M 47,293 44,797 Total insurance capital, SEK M 3,688 3,517 Total insurance capital, SEK M 16,686 15,705 Number of customers 229,500 232,300 Number of customers 32,000 32,000 Number of customers 94,200 94,800

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 1,587 1,580 Premiums earned, SEK M 472 455 Premiums earned, SEK M 1,214 1,151 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M –41 39 operations, SEK M –9 16 operations, SEK M 122 42 Combined ratio after ceded Combined ratio after ceded Combined ratio after ceded reinsurance, % 106 101 reinsurance, % 104 99 reinsurance, % 93 98 Total return on asset Total return on asset Total return on asset management, % 7 6 management, % 9 7 management, % 9 8 Number of customers 325,400 322,800 Number of customers 88,900 86,800 Number of customers 213,900 209,900

länsförsäkringar Alliance 2013 43 Länsförsäkringar Länsförsäkringar Länsförsäkringar Skaraborg Östgöta Älvsborg

President President President Carl Henrik Ohlsson Anders Rahm Sten Lundqvist Board Chairman Board Chairman Board Chairman Jonas Rosman Lars-Eric Åström Lars Hallkvist

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 68 86 and discounts, SEK M 352 335 and discounts, SEK M 479 250 Total assets, SEK M 2,012 1,864 Total assets, SEK M 6,146 5,895 Total assets, SEK M 5,186 4,606 Solvency margin, % 132 126 Solvency margin, % 307 294 Solvency margin, % 321 292 Number of employees 151 149 Number of employees 303 300 Number of employees 260 282 Number offices 8 7 Number offices 7 6 Number offices 10 7

Bank Bank Bank Deposits, SEK M 2,800 2,515 Deposits, SEK M 5,778 5,275 Deposits, SEK M 3,928 3,503 Loans, SEK M 1,697 1,547 Loans, SEK M 3,227 3,142 Loans, SEK M 1,881 1,711 Retail mortgages, SEK M 3,354 2,977 Retail mortgages, SEK M 7,906 6,720 Retail mortgages, SEK M 7,510 6,851 Fund volumes managed, SEK M 322 256 Fund volumes managed, SEK M 491 383 Fund volumes managed, SEK M 389 315 Number of customers 31,500 29,900 Number of customers 51,800 48,800 Number of customers 62,500 61,100

Life assurance Life assurance Life assurance Premium income, SEK M 204 208 Premium income, SEK M 941 959 Premium income, SEK M 377 409 Total insurance capital, SEK M 4,180 4,069 Total insurance capital, SEK M 10,311 9,363 Total insurance capital, SEK M 7,078 6,792 Number of customers 34,300 34,300 Number of customers 71,100 70,900 Number of customers 62,400 62,500

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 563 543 Premiums earned, SEK M 1,124 1,084 Premiums earned, SEK M 944 892 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 28 50 operations, SEK M 6 132 operations, SEK M 82 103 Combined ratio after ceded Bonuses and discounts, SEK M – –130 Bonuses and discounts, SEK M –23 –28 reinsurance, % 98 93 Combined ratio after ceded Combined ratio after ceded Total return on asset reinsurance, % 102 89 reinsurance, % 95 93 management, % 5 5 Total return on asset Total return on asset Number of customers 97,800 95,600 management, % 8 5 management, % 12 6 Number of customers 185,500 182,700 Number of customers 164,900 162,900

44 länsförsäkringar Alliance 2013 Länsförsäkringar Länsförsäkringar Länsförsäkringar Gotland Jönköping Halland

President President President Mariette Nicander Örian Söderberg Christian Bille Board Chairman Board Chairman Board Chairman Gösta af Petersens Göran Lindell Karin Starrin

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 80 55 and discounts, SEK M 250 253 and discounts, SEK M 128 107 Total assets, SEK M 1,090 1,058 Total assets, SEK M 4,405 3,988 Total assets, SEK M 3,121 2,923 Solvency margin, % 365 338 Solvency margin, % 263 242 Solvency margin, % 281 273 Number of employees 63 62 Number of employees 188 188 Number of employees 149 146 Number offices 2 2 Number offices 5 5 Number offices 6 6

Bank Bank Bank Deposits, SEK M 1,292 1,076 Deposits, SEK M 3,350 3,007 Deposits, SEK M 3,067 2,861 Loans, SEK M 1,603 1,525 Loans, SEK M 1,661 1,554 Loans, SEK M 3,184 3,268 Retail mortgages, SEK M 2,492 2,210 Retail mortgages, SEK M 4,070 3,605 Retail mortgages, SEK M 5,595 5,407 Fund volumes managed, SEK M 92 76 Fund volumes managed, SEK M 343 234 Fund volumes managed, SEK M 289 242 Number of customers 12,500 11,400 Number of customers 27,600 ,26,000 Number of customers 33,900 33,500

Life assurance Life assurance Life assurance Premium income, SEK M 89 89 Premium income, SEK M 350 362 Premium income, SEK M 273 291 Total insurance capital, SEK M 1,054 960 Total insurance capital, SEK M 6,443 6,136 Total insurance capital, SEK M 5,194 5,052 Number of customers 11,900 11,800 Number of customers 44,500 44,600 Number of customers 43,900 44,100

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 174 168 Premiums earned, SEK M 824 787 Premiums earned, SEK M 543 527 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 20 16 operations, SEK M 28 88 operations, SEK M 16 51 Bonuses and discounts, SEK M – –38 Bonuses and discounts, SEK M – –27 Combined ratio after ceded Combined ratio after ceded Combined ratio after ceded reinsurance, % 102 95 reinsurance, % 91 94 reinsurance, % 98 89 Total return on asset management, % 8 6 Total return on asset Total return on asset management, % 9 5 management, % 8 6 Number of customers 95,300 94,600 Number of customers 29,400 29,100 Number of customers 124,000 122,500

länsförsäkringar Alliance 2013 45 Länsförsäkring Länsförsäkringar Länsförsäkringar Kronoberg Kalmar län Blekinge

President President President Fredrik Daveby Niklas Lundin Magnus Olsson Board Chairman Board Chairman Board Chairman Per-Åke Holgersson Christer Olander Anders Larsson

Key figures 2013 2012 Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 124 100 and discounts, SEK M 270 170 and discounts, SEK M 62 57 Total assets, SEK M 1,893 1,683 Total assets, SEK M 3,075 2,852 Total assets, SEK M 1,418 1,297 Solvency margin, % 248 233 Solvency margin, % 281 263 Solvency margin, % 289 ,273 Number of employees 88 88 Number of employees 159 165 Number of employees 64 73 Number offices 3 3 Number offices 9 9 Number offices 4 4

Bank Bank Bank Deposits, SEK M 1,829 1,613 Deposits, SEK M 2,241 2,031 Deposits, SEK M 1,193 1,085 Loans, SEK M 953 906 Loans, SEK M 1,058 1,001 Loans, SEK M 837 846 Retail mortgages, SEK M 1,817 1,661 Retail mortgages, SEK M 2,479 2,159 Retail mortgages, SEK M 1,941 1,784 Fund volumes managed, SEK M 154 123 Fund volumes managed, SEK M 260 192 Fund volumes managed, SEK M 171 127 Number of customers 27,300 27,300 Number of customers 18,200 17,100 Number of customers 11,800 11,300

Life assurance Life assurance Life assurance Premium income, SEK M 181 177 Premium income, SEK M 175 183 Premium income, SEK M 145 153 Total insurance capital, SEK M 3,497 3,399 Total insurance capital, SEK M 3,893 3,792 Total insurance capital, SEK M 2,359 2,240 Number of customers 23,300 23,500 Number of customers 31,000 30,900 Number of customers 18,800 18,800

Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 383 373 Premiums earned, SEK M 628 599 Premiums earned, SEK M 260 251 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 31 42 operations, SEK M 113 66 operations, SEK M 17 28 Bonuses and discounts, SEK M –24 –1 Bonuses and discounts, SEK M –65 –51 Combined ratio after ceded Combined ratio after ceded Combined ratio after ceded reinsurance, % 95 93 reinsurance, % 93 91 reinsurance, % 90 99 Total return on asset Total return on asset Total return on asset management, % 7 5 management, % 8 5 management, % 9 7 Number of customers 52,900 52,500 Number of customers 65,600 64,600 Number of customers 105,300 104,400

46 länsförsäkringar Alliance 2013 Länsförsäkringar Länsförsäkringar Göinge-­Kristianstad Skåne

President President Henrietta Hansson Susanne Petersson Board Chairman Board Chairman Göran Trobro Otto Ramel

Key figures 2013 2012 Key figures 2013 2012 Operating profit before bonuses Operating profit before bonuses and discounts, SEK M 175 126 and discounts, SEK M 480 377 Total assets, SEK M 2,538 2,338 Total assets, SEK M 8,122 7,062 Solvency margin, % 351 343 Solvency margin, % 213 195 Number of employees 101 107 Number of employees 455 438 Number offices 3 3 Number offices 6 6

Bank Bank Deposits, SEK M 1,696 1,558 Deposits, SEK M 4,624 3,843 Loans, SEK M 1,471 1,366 Loans, SEK M 3,445 3,330 Retail mortgages, SEK M 1,992 1,860 Retail mortgages, SEK M 10,914 9,970 Fund volumes managed, SEK M 175 142 Fund volumes managed, SEK M 545 412 Number of customers 15,500 15,000 Number of customers 59,100 54,600

Life assurance Life assurance Premium income, SEK M 158 171 Premium income, SEK M 1,083 1,118 Total insurance capital, SEK M 3,230 3,138 Total insurance capital, SEK M 18,067 17,346 Number of customers 27,300 27,300 Number of customers 124,000 124,100

Non-life insurance Non-life insurance Premiums earned, SEK M 402 394 Premiums earned, SEK M 1,714 1,625 Technical result for insurance Technical result for insurance operations, SEK M 40 33 operations, SEK M 4 23 Bonuses and discounts, SEK M –100 – Combined ratio after ceded Combined ratio after ceded reinsurance, % 102 101 reinsurance, % 92 94 Total return on asset Total return on asset management, % 10 9 management, % 8 6 Number of customers 334,600 327,500 Number of customers 72,900 72,100

länsförsäkringar Alliance 2013 47 Where we create the conditions for closeness in local customer meetings

each other in order to fulfil the vision and ABOUT Läns­för­säkringar AB Länsförsäkringar AB and its subsidiaries achieve the objectives. Länsförsäkringar’s are tasked by the regional insurance companies to conduct joint banking common values are trust, commitment, and insurance operations, pursue strategic development activities and openness and professionalism. provide service in areas that generate economies of scale and efficiency, Closeness in all customer meetings to create opportunities for the regional insurance companies to be suc- Länsförsäkringar works in all channels and cessful in their respective markets. in all customer meetings with a brand pro- mise based on closeness. The perception of greater closeness and less distance in a relationship with Länsförsäkringar is the The operations of the jointly owned com- companies. Länsförsäkringar Liv and its guiding principle for everything – from pany Länsförsäkringar AB are tasked with subsidiaries are not consolidated in the product development to a personal custo- conducting profitable business activities in ­consolidated financial statements since the mer meeting. The principle of closeness is non-life insurance, life assurance and ban- company’s earnings accrue in their entirety based on, for example, geographic proxi- king services, developing products, con- to the policyholders. mity, closeness of attitude and closeness in cepts, meeting places and tools, and provi- terms of decision-making. Understanding ding business service to the regional insu- Value-based planing and a commitment from the entire Länsför- rance companies. This ensures that the regi- Länsförsäkringar AB has worked for many säkringar Alliance is required to succeed in onal insurance companies can offer their years on vision and value-based planning of creating clarity in the market about what customers the right range of products and the operations. The vision and values serve the brand stands for. It is not enough for enables private individuals, companies as guiding principles for all operations in only employees in customer-facing roles in and farmers in Sweden to live in safety. The the Group. Länsförsäkringar AB’s Group- the regional insurance companies to known Länsförsäkringar Alliance’s reinsurance wide business plan defines its vision, values what the brand promise is; all employees cover, a number of pool solutions and joint and success factors. The vision is a descrip- at Länsförsäkringar AB need to have such group insurance cover and assumed inter- tion of how Länsförsäkringar AB wants understanding since the mission is to create national reinsurance are managed in the things to be in the world in which it opera- conditions for the regional insurance com- Länsförsäkringar AB Group. tes. The vision is “together we create secu- panies to succeed in their local customer Länsförsäkringar AB is wholly owned rity.” With almost 6,000 employees, the meetings. The principles of closeness on by the 23 regional insurance companies, Länsförsäkringar Alliance works to provide which the brand is built are fully integrated together with 16 local insurance companies. financial security for 3.5 million customers. into Länsförsäkringar AB’s business plan The regional insurance companies impose Länsförsäkringar exists to create a sense of and comprise success factors in this plan. demands on capital use and a reasonable security for our customers no matter what return on equity corresponding to 5% over needs they have – from buying and selling a Economies of scale – the large scale in the risk-free interest rate over time. In 2013, home, non-life insurance, pension banking the small through Länsförsäkringar AB the return on equity amounted to 5%. In services and mortgages to various types of Cooperation in the Länsförsäkringar Alli- addition to the Parent Company, Länsför- savings. The Länsförsäkringar Alliance’s ance has gradually emerged. The local com- säkringar AB, the Group encompasses success is built on local presence and exten- panies decided to cooperate together to Länsförsäkringar Sak, Länsförsäkringar sive experience. achieve economies of scale and to concen- Bank, Länsförsäkringar Fondliv, Länsför- The values describe how Länsförsäkringar trate on the most important issue: meetings säkringar Liv and the subsidiaries of these AB’s employees are expected to relate to with customers. Instead of developing these

48 länsförsäkringar alliance 2013 resources at local level, the regional insu- Governance of risk-taking Almost two thirds of the Länsförsäkringar rance companies can share expenses in and capital use Alliance’s capital, excluding the capital in such areas as product and concept develop- Business activities are conducted to gene- Länsförsäkringar Liv, which belongs to its ment, IT operations and management and rate a profit so that the company can pay policyholders, is invested in the regional brand communication. The separation of competitive returns. All capital that is not insurance companies. Accordingly, the duties among the 23 regional insurance required for Länsförsäkringar AB’s opera- Group’s capital strength is assessed not only companies and Länsförsäkringar AB crea- tions is returned over time to the owners in on its own situation but also includes the tes a clear focus for each party. Länsförsäk- the form of dividends. The Group’s capital capital strength of the regional insurance ringar AB creates the conditions for the situation in relation to its combined risks companies. Rating agencies and other sta- regional insurance companies to be more forms the basis of decisions on potential keholders have that approach. The regional effective in their roles. Economic efficiency dividend payments. Länsförsäkringar AB insurance companies are extremely well is a basic prerequisite for this. That is why endeavours to maintain a balance between consolidated and thus are highly able to certain non-life insurance operations are capital strength and risk-taking to justify a contribute capital to the Group. At Länsför- considered best suited to a joint concession. minimum credit rating of A. Governance of säkringar AB’s Extraordinary General Mee- This interface does not affect customer rela- risk-taking and capital use is a priority for ting in January 2013, the owners resolved tions, which are managed by the respective the Group. The banking operations already to implement a new share issue of SEK 500 regional insurance company in the same have target for risk-based capital strength in M. The capital contribution has primarily manner as a local bank or insurance com- the form of a target for the Tier 1 ratio. In been used to strengthen Länsförsäkringar pany. This is the foundation of the Länsför- recent years, the non-life insurance opera- Bank’s capital base in order to meet the säkringar concept. For customers, Länsför- tions and the entire Group have started app- new capital adequacy requirements that säkringar is always close at hand with local lying targets for risk-based capital strength are being imposed on Swedish banks. decision-making. The basis is local presence more clearly in their internal governance. and decision-making powers: – experience These targets are determined by taking into has proven that local decision-making aut- account internal assessments of the risk hority, combined with shared strengths, cre- level of different operations and current ates substantial added value for customers. and future legal requirements.

länsförsäkringar alliance 2013 49 Organisation and facts Länsförsäkringar AB

Organisational chart – Länsförsäkringar AB

Board of Directors

Internal Audit

President

Compliance Economy & Finance Risk Control Legal Affairs Asset Management

Non-life Insurance Life Assurance business unit Bank business unit business unit

Traditional Life Assurance unit

Business Support

2013 in brief Shareholdings in Länsförsäkringar AB Number of shares Share of Operating profit amounted to Company A B C equity, % SEK 923 M (819). Länsförsäkringar Skåne 141,849 808,405 – 9.7 Länsförsäkringar Stockholm 129,212 780,180 – 9.3 Operating profit in the Bank Länsförsäkringar Östgöta 114,155 608,445 – 7.4 Group strengthened SEK 92 M Dalarnas Försäkringsbolag 104,708 547,893 – 6.7 to SEK 647 M (555). Länsförsäkringar Älvsborg 100,176 537,252 – 6.5 Länsförsäkringar Göteborg och Bohuslän 87,010 544,391 768 6.5 The technical result for the Länsförsäkringar Bergslagen 86,351 453,085 – 5.5 non-life insurance operations Länsförsäkringar Jönköping 82,812 437,973 – 5.3 Länsförsäkringar Uppsala 73,298 392,546 – 4.8 increased to SEK 434 M (304). Länsförsäkringar Västerbotten 57,195 302,880 – 3.7 The combined ratio amounted Länsförsäkringar Södermanland 58,117 298,457 – 3.7 Länsförsäkringar Halland 56,785 301,926 – 3.7 to SEK 93 M (97). Länsförsäkringar Göinge-Kristianstad 49,982 298,243 – 3.6 Länsförsäkringar Gävleborg 60,058 270,352 – 3.4 Profit for the life-assurance Länsförsäkringar Kalmar län 56,717 273,052 – 3.4 and pension insurance opera- Länsförsäkringar Västernorrland 50,186 244,134 – 3.0 tions in Länsförsäkringar Fondliv Länsförsäkringar Skaraborg 64,058 232,635 – 3.0 increased 92% to SEK 246 M Länsförsäkringar Jämtland 35,795 207,605 – 2.5 (128). Länsförsäkring Kronoberg 36,701 187,604 – 2.3 Länsförsäkringar Värmland 31,160 187,100 – 2.2 Länsförsäkringar Norrbotten 16,960 118,338 – 1.4 Länsförsäkringar Blekinge 23,088 111,204 – 1.4 Länsförsäkringar Gotland 16,305 67,769 – 0.9 14 local insurance companies – – 4,800 0.05 Total number of shares 1,532,678 8,211,469 5,568 100.0

Share trend, Länsförsäkringar AB

SEK 2013 2012 2011 2010 2009 Equity per share 1,557 1,479 1,403 1,356 1,279

50 länsförsäkringar alliance 2013 Definitions

After ceded reinsurance Investment income transferred from financial Solvency capital The proportion of an insurance transaction for which operations The sum of shareholders’ equity, untaxed reserves the insurance company assumes the risk, and which Premiums are paid in advance, while operating ex- (including deferred tax liabilities), subordinated debt is not reinsured with another company. Sometimes penses and claims costs are paid in arrears. Funds as well as surplus values on assets. the term “for own account” is used. that have not yet been paid out are invested in order to obtain a return. The estimated interest on these Solvency, life assurance Capital base, bank investments – the computed interest – is transferred The market value of the company’s total net assets The capital base comprises the sum of Tier 1 and from investment income to the insurance operations. in relation to guaranteed commitments­ to policyhold- Tier 2 capital and the difference between expected ers (technical provisions according to the balance losses and reserves established for probable loan Loan losses in relation to lending sheet), expressed as a percentage. losses. Net loan losses in relation to the carrying amount of loans to the public and to credit institutions. Solvency, life insurance Claims payments The ratio between the market value of the total net The cost during the fiscal year for claims incurred, Loan losses net, bank assets and the company’s total commitments to poli- including costs for claims that have not yet been Confirmed loan losses and reserves for loan losses cyholders (guaranteed commitments and preliminar- reported to the insurance company. The cost also less recoveries of receivables and net expense for ily distributed bonus) for insurance policies that includes the run-off result, meaning the profit and the year for loan losses for guarantees and other carry bonus rights, expressed as a percentage. loss arising in the provision for claims outstanding contingent liabilities. made in the immediately preceding year-end ac- Solvency margin, non-life insurance counts. Run-off profit/loss arises since some of the Net interest income, bank Solvency capital as a percentage of premium claims in the provision are either settled during the Interest income from loans to the public, credit income after ceded reinsurance. fiscal year at amounts differing from those allocated institutions and income from interest-bearing securi- or are revalued pending final settlement. ties less expenses for deposits and funding from the Technical provisions ­public, credit institutions and expenses for interest- Reserves for unearned premiums and unexpired Claims ratio, non-life insurance bearing securities. risks, life assurance reserves and reserves for claims The ratio between Claims payments, including outstanding and comparable commitments in ac- claims adjustment costs and Premiums earned after Operating expenses, insurance cordance with signed insurance contracts. For life ceded reinsurance, expressed as a percentage. Includes costs of marketing, sales and administra- assurance, this shall correspond to the company’s tion in insurance operations. guaranteed insurance commitments. Combined ratio, non-life insurance The sum of operating expenses, claims payments Premiums earned Technical result for insurance operations and claims adjustment costs in relation to premiums The proportion of premium income attributable Premiums earned less claims payments and operat- earned after ceded reinsurance, expressed as a to the fiscal year. ing expenses plus income from ceded reinsurance percentage. and investment income transferred from financial Premium income ­operations. Expense ratio, non-life insurance Premiums paid in during the year or recognised as Operating expenses as a percentage of premiums receivables at year-end since they have fallen due Total return ratio, non-life insurance earned after ceded reinsurance. for payment. Premium income is a common meas- The sum of direct yield, realised gains and losses, ure of the volume of insurance business. and unrealised changes in the value of assets in Interest-bearing securities relation to the average fair value of managed assets. Loans issued in the market by a borrower (such as Reinsurance the government). Long-term securities are normally If an insurance company cannot, or does not wish termed bonds, while short-term loans are in the form to, assume the entire liability to policyholders, it of what are commonly called bills. reinsures part of its policies with other companies. In this connection, the reinsurance is said to be Investment assets “ceded” by the first company and ­“assumed” by Investment assets are current or long-term assets the second company. that take the form of an investment. This includes real estate and securities in the case of an insurance Return on equity company. Profit before tax plus change in surplus value of owner-occupied property less standard tax at a rate Investment income, non-life insurance of 26.3% as a percentage of average equity adjusted The net of the following income and expense: for dividends and new share issue. interest income, interest expense, dividends on shares and participations, surplus (deficit) on Run-off result company-owned property, change in the fair value Profit and loss arising at accounting year-end in of properties, shares, interest-bearing securities and the provision for claims outstanding made in the derivatives, gains (losses) on the sale of investment preceding year-end accounts. The profit/loss arises assets, currency exchange gains (losses), less oper- since some of the claims in the provision are either ating expenses in asset management. settled during the fiscal year at amounts differing from those allocated or are revalued pending final settlement.

länsförsäkringar alliance 2013 51 Financial calendar 2014

First quarter: Interim report, Länsförsäkringar AB April 29 Interim report, Länsförsäkringar Bank april 29 Interim report, Länsförsäkringar Hypotek april 29 Interim review, Länsförsäkringar Alliance april 29

Second quarter: Interim report, Länsförsäkringar AB July 18 Interim report, Länsförsäkringar Bank July 18 Interim report, Länsförsäkringar Hypotek July 18 Interim review, Länsförsäkringar Alliance July 18

Third quarter: Interim report, Länsförsäkringar AB October 23 Interim report, Länsförsäkringar Bank October 23 Interim report, Länsförsäkringar Hypotek October 23 Interim review, Länsförsäkringar Alliance October 23

52 länsförsäkringar alliance 2013 Addresses

Länsförsäkringar Norrbotten Länsförsäkringar Stockholm Länsförsäkring Kronoberg Länsförsäkringar Bank Box 937 SE-115 97 Stockholm Box 1503 SE-106 50 Stockholm SE-971 28 Luleå Visit: Tegeluddsvägen 21 SE-351 15 Växjö Visit: Tegeluddsvägen 11–13 Visit: Köpmantorget Phone: +46 8-562 834 00 Visit: Kronobergsgatan 10 Phone: +46 8-588 416 00 Phone: +46 920-24 25 00 E-mail: [email protected] Phone: +46 470-72 00 00 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Länsförsäkringar Södermanland Länsförsäkringar Hypotek Länsförsäkringar Västerbotten Box 147 Länsförsäkringar Kalmar län SE-106 50 Stockholm Box 153 SE-611 24 Nyköping Box 748 Visit: Tegeluddsvägen 11–13 SE-901 04 Umeå Visit: Västra Storgatan 4 SE-391 27 Kalmar Phone: +46 8-588 416 00 Visit: Nygatan 19 Phone: +46 155-48 40 00 Visit: Norra Långgatan 17 E-mail: [email protected] Phone: +46 90-10 90 00 E-mail: [email protected] Phone: +46 20-66 11 00 E-mail: [email protected] E-mail: [email protected] Länsförsäkringar Fondförvaltning Länsförsäkringar Göteborg och Bohuslän SE-106 50 Stockholm Länsförsäkringar Jämtland SE-404 84 Gothenburg Länsförsäkringar Blekinge Visit: Tegeluddsvägen 11–13 Box 367 Visit: Lilla Bommen 8 Box 24 Phone: +46 8-588 400 00 SE-831 25 Östersund Phone: +46 31-63 80 00 SE-374 21 Karlshamn E-mail: [email protected] Visit: Prästgatan 18 E-mail: [email protected] Visit: Kyrkogatan 21 Phone: +46 63-19 33 00 Phone: +46 454-30 23 00 Länsförsäkringar Fastighetsförmedling E-mail: [email protected] Länsförsäkringar Skaraborg E-mail: [email protected] Box 742 Box 600 SE-251 07 Helsingborg Länsförsäkringar Västernorrland SE-541 29 Skövde Länsförsäkringar Göinge-Kristianstad Visit: Södergatan 15 Box 164 Visit: Rådhusgatan 8 Box 133 Phone: +46 42-633 98 10 SE-871 24 Härnösand Phone: +46 500-77 70 00 SE-291 22 Kristianstad E-mail: [email protected] Visit: Köpmangatan 13 E-mail: [email protected] Visit: Tivoligatan 6 Phone: +46 611-36 53 00 Phone: +46 44-19 62 00 Länsförsäkringar Mäklarservice E-mail: [email protected] Länsförsäkringar Östgöta E-mail: info.goinge-kristianstad@ Box 27120 Box 400 lansforsakringar.se SE-102 52 Stockholm Länsförsäkringar Gävleborg SE-581 04 Linköping Visit: Tegeluddsvägen 21 Box 206 Visit: Platensgatan 11 Länsförsäkringar Skåne Phone: +46 8-588 490 00 SE-801 03 Gävle Phone: +46 13-29 00 00 Box 4548 E-mail: Visit: Slottstorget 3 E-mail: [email protected] SE-208 20 Helsingborg [email protected] Phone: +46 26-14 75 00 Visit: Lugna Gatan 82 E-mail: [email protected] Länsförsäkringar Älvsborg Phone: +46 42-633 80 00 Wasa Kredit Box 1107 E-mail: [email protected] Box 6740 Dalarnas Försäkringsbolag SE-462 28 Vänersborg SE-113 85 Stockholm Box 3 Visit: Vallgatan 21 JOINT COMPANIES Visit: Tegeluddsvägen 21 SE-791 21 Falun Phone: +46 521-27 30 00 Phone: +46 8-635 38 00 Länsförsäkringar AB Visit: Slaggatan 9 E-mail: [email protected] E-mail: [email protected] SE-106 50 Stockholm Phone: +46 23-930 00 Visit: Tegeluddsvägen 11–13 E-mail: [email protected] Länsförsäkringar Gotland Agria Djurförsäkring Phone: +46 8-588 400 00 Box 1224 Box 70306 E-mail: [email protected] Länsförsäkringar Värmland SE-621 23 Visby SE-107 23 Stockholm Box 367 Visit: Österväg 17 Visit: Tegeluddsvägen 11–13 Länsförsäkringar Liv SE-651 09 Karlstad Phone: +46 498-28 18 50 Phone: +46 8-588 421 00 SE-106 50 Stockholm Visit: Köpmannagatan 2 A E-mail: [email protected] E-mail: [email protected] Visit: Tegeluddsvägen 11–13 Phone: +46 54-775 15 00 Phone: +46 8-588 400 00 E-mail: [email protected] Länsförsäkringar Jönköping Humlegården Fastigheter E-mail: [email protected] Box 623 Box 5182 Länsförsäkringar Uppsala SE-551 18 Jönköping SE-102 44 Stockholm Länsförsäkringar Fondliv SE-753 40 Uppsala Visit: Barnarpsgatan 22 Visit: Birger Jarlsgatan 25 SE-106 50 Stockholm Visit: Stationsgatan 14 Phone: +46 36-19 90 00 Phone: +46 8-678 92 00 Visit: Tegeluddsvägen 11–13 Phone: +46 18-68 55 00 E-mail: [email protected] E-mail: [email protected] Phone: +46 8-588 400 00 E-mail: [email protected] E-mail: [email protected] Länsförsäkringar Halland Länsförsäkringar Bergslagen Box 518 Länsförsäkringar Sak Box 1046 SE-301 80 Halmstad SE-106 50 Stockholm SE-721 26 Västerås Visit: Strandgatan 10 Visit: Tegeluddsvägen 11–13 Visit: Stora Gatan 41 Phone: +46 35-15 10 00 Phone: +46 8-588 400 00 Phone: +46 21-19 01 00 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]

Production: Länsförsäkringar Bank in cooperation with Hallvarsson & Halvarsson. Photo: Länsförsäkringar’s image bank, Johnér, Jimmy Eriksson, Scandinav Bildbyrå and Shutterstock. Print: Elanders Sweden. We print on environmentally friendly paper. Translation: The Bugli Company AB.

länsförsäkringar alliance 2013 53 LFAB 03408-15 eng.