Länsförsäkringar Alliance Annual Review Annual About Us

Länsförsäkringar Alliance Annual Review Annual About us

Länsförsäkringar Alliance

Länsförsäkringar Alliance comprises 23 local Offering 23 local companies 3.8 million customers and customer-owned regional insurance companies and the jointly owned Länsförsäk- Non-life insurance ringar AB with subsidiaries. Customers are provided with a complete offering of banking, insurance, pension and real-estate brokerage services through the regional insurance Bank companies. The starting point is local presence and decision-making. Experience shows Life assurance and that local decision-making authority com- pension insurance bined with joint strength creates substantial added value for customers. The regional insurance companies are owned by the insurance customers – there are no external Real-estate brokerage shareholders and meeting customer needs and requirements is always the primary task. The Länsförsäkringar Alliance has 3.8 million customers and 6,400 employees.

The Länsförsäkringar Alliance is not a Group in the legal sense Alliance’s non-life insurance operations consist of the total of the term. Most of the non-life insurance business in the Läns- earnings of the 23 regional insurance companies and the Läns- försäkringar Alliance is underwritten in the regional insurance försäkringar AB Group, excluding Länsförsäkringar Fondliv and companies. The business conducted by Länsförsäkringar AB’s the Länsförsäkringar Bank Group. Länsförsäkringar Liv is oper- non-life insurance group primarily comprises health, pet and ated according to mutual principles and is not consolidated in crop insurance. The Länsförsäkringar AB Group also manages Länsförsäkringar AB. Transactions between the regional insur- the Länsförsäkringar Alliance’s reinsurance cover and assumed ance companies and Länsförsäkringar AB Group are eliminated. international reinsurance. Earnings from the Länsförsäkringar

3.8 million customers

23 local regional insurance companies

Länsförsäkringar AB

Länsförsäkringar Länsförsäkringar Länsförsäkringar Länsförsäkringar Sak Försäkrings AB Bank AB Fondliv Försäkrings AB Liv Försäkrings AB Supplements the regional Offers a broad range of banking Offers pension savings with fund Manages traditional life insurance companies’ non-life services to the regional insur- management and guarantee assurance taken out before Sep- insurance offering with specialist ance companies’ customers management and personal-risk tember 2011 when the company products, serves as an engine for through Länsförsäkringar insurance to the regional insur- closed for new sales. new business and is responsible Hypotek, Länsförsäkringar Fond- ance companies’ customers. for joint reinsurance. förvaltning and Wasa Kredit.

Rating Company Agency Long-term rating Short-term rating Länsförsäkringar AB S&P Global Ratings A–/Stable – Länsförsäkringar AB Moody’s A3/Stable – Länsförsäkringar Bank S&P Global Ratings A/Stable A–1 (K–1) Länsförsäkringar Bank Moody’s A1/Stable P–1 Länsförsäkringar Hypotek1) S&P Global Ratings AAA/Stable – Länsförsäkringar Hypotek1) Moody’s Aaa – Länsförsäkringar Sak S&P Global Ratings A/Stable – Länsförsäkringar Sak Moody’s A2/Stable –

1) Pertains to the company’s covered bonds. The 2017 fiscal year

Five-year summary Result for the regional insurance companies Länsförsäkringar Alliance 2017 2016 2015 2014 2013 Total capital, SEK M 72,442 63,390 55,562 48,188 41,518 Operating profit/ Länsförsäkringar Alliance’s Technical result1) loss1) non-life insurance SEK M 2017 2016 2017 2016 Solvency capital, SEK M 66,149 57,956 51,628 46,493 40,458 Länsförsäkringar Norrbotten 57 22 124 113 Solvency margin, % 253 236 222 209 206 Länsförsäkringar Västerbotten 87 39 335 267 Return on equity, % 11 8 8 11 10 Länsförsäkringar Jämtland 27 12 215 127 Premiums earned after ceded reinsurance, SEK M 25,504 24,073 22,705 21,550 20,067 Länsförsäkringar Västernorrland –1 7 100 67 Technical result, SEK M 2,529 1,813 2,700 2,266 1,247 Länsförsäkringar Gävleborg 30 7 166 96 Operating profit, SEK M 7,078 4,626 4,365 5,209 3,863 Dalarnas Försäkringsbolag 110 126 772 640 Combined ratio, % 92 95 91 93 98 Länsförsäkringar Värmland 36 64 158 182 Länsförsäkringar AB, Group1) Länsförsäkringar Uppsala 26 –53 316 188 Operating profit, SEK M 2,825 2,286 2,155 1,469 923 Länsförsäkringar Bergslagen 35 –22 705 462 Total assets, SEK M 473,773 421,816 384,595 355,933 322,550 Länsförsäkringar Stockholm 106 115 463 441 Return on equity, % 11 10 11 7 5 Länsförsäkringar Södermanland 50 –3 349 252 Own funds for the group (FRL)2) 44,172 40,602 36,9054), – – Länsförsäkringar Göteborg och Bohuslän 77 202 895 723 Capital requirement for the Länsförsäkringar Skaraborg 119 52 315 170 2) 4) group (FRL) 33,441 30,121 28,233 – – Länsförsäkringar Östgöta 157 99 820 690 Own funds for the financial Länsförsäkringar Älvsborg 228 210 930 736 conglomerate3) 44,172 40,352 – – – Länsförsäkringar Gotland 54 11 137 89 Capital requirement for the financial conglomerate3) 33,441 30,121 – – – Länsförsäkringar Jönköping 58 128 407 438 Länsförsäkringar Sak, Group Länsförsäkringar Halland 99 106 380 323 Premiums earned after ceded Länsförsäkring Kronoberg 49 28 217 168 reinsurance, SEK M 5,623 5,342 5,074 4,099 4,122 Länsförsäkringar Kalmar län 60 68 338 291 Technical result, SEK M 977 435 821 611 434 Länsförsäkringar Blekinge 25 –8 154 118 Operating profit, SEK M 1,028 644 908 791 427 Länsförsäkringar Göinge-Kristianstad 53 24 278 248 Solvency ratio, % (Läns- Länsförsäkringar Skåne 211 75 1 167 711 försäkringar Sak Försäkrings AB) 221 260 2354) – –

1) Länsförsäkringar Bank, Group Before bonuses and discounts. Deposits from the public, SEK M 99,404 91,207 83,925 76,790 69,220 Loans to the public, SEK M 261,444 226,705 201,964 179,424 162,003 Results 2017 for Operating profit, SEK M 1,599 1,467 1,175 935 647 Return on equity, % 10,0 10,1 8,9 8,3 6,7 Länsförsäkringar Alliance Common Equity Tier 1 capital •• Operating profit for the Länsförsäkringar Alliance’s non-life ratio, % 24,3 24,8 23,7 16,2 – insurance operations increased to SEK 7.1 billion (4.6), after bonus- Länsförsäkringar Fondliv AB es and discounts to customers amounting to SEK 1.8 billion (1.2). Premium income, SEK M 9,133 8,637 8,645 8,543 9,473 • Net profit for the year, SEK M 604 516 519 368 246 • Premiums earned after ceded reinsurance rose to Managed assets, SEK M 128,140 114,450 102,807 93,610 77,438 SEK 25.5 billion (24.1). Solvency ratio, % 152 150 1414) – – •• The technical result for the Länsförsäkringar Alliance’s non-life Länsförsäkringar Liv, Group insurance operations increased to SEK 2.5 billion (1.8). Premium income, SEK M 1,533 1,720 1,919 2,639 3,388 •• Investment income increased to SEK 7.0 billion (5.0). Net profit for the year, SEK M 2,363 2,682 5,089 1,903 5,174 Solvency ratio, % 207 195 1824) – – Länsförsäkringar Alliance’s Bonuses and discounts 1) Excluding Länsförsäkringar Liv Försäkrings AB. The company is operated in accordance with combined ratio to customers mutual principles. 2) According to Swedish Insurance Business Act (FRL), the Solvency II directive in Swedish law. 3) The financial conglomerate comprises Länsförsäkringar AB, all insurance companies in the Group, Länsförsäkringar Bank AB with subsidiaries and Länsförsäkringar Liv Försäkrings AB. 4) Opening balance on 1 January 2016 according to Solvency II. SEK bn Contents It is gratifying that we can report continued strong earn-

1 The year in brief ings for the Länsförsäkringar Alliance 2 Comments by the President for 2017. Based on these strong earn- 4 About Länsförsäkringar ings, the regional insurance companies 6 Offering 8 Our business environment pay back a total of SEK 1.8 billion in 10 The brand bonuses and discounts to their cus- 12 Sustainability tomers. In 2017, Länsförsäkringar once 20 Non-life insurance 28 Banking again topped the Swedish Quality 35 Life assurance and pension insurance Index’s customer satisfaction survey in 40 Real-estate brokerage banking, private non-life insurance and 41 Länsförsäkringar Alliance in figures 52 About Länsförsäkringar AB real-estate brokerage, won the Swedish 53 Definitions Brand Award, and the Red Dot Award 54 Financial calendar 2018 and Web Service Award for its app. 55 Addresses The Länsförsäkringar Global Hållbar sustainability fund was given the green light by Söderberg & Partners and placed in its list of top ten Swedish sustainable funds.”

Sören Westin President and CEO of Länsförsäkringar AB The Länsförsäkringar Alliance’s jointly owned company

The Länsförsäkringar Alliance’s annual review of 2017 contains information about Länsförsäkringar’s operations in non-life insurance, banking, life assurance and pension insurance and real-estate brokerage. The sustainability sec- tion contains information about Länsförsäkringar’s work on sustainability in its customer offering, operations and social commitment. The combined earnings of the Länsförsäkringar Alliance’s non-life insurance operations are presented on pages 41-51. This will be followed by key figures from each of the 23 regional insurance companies. The year in brief

Satisfied customers and awards Top ten Länsförsäkringar confirmed its position as one of the strongest brands sustainable fund in Sweden. The 2017 Swedish Quality Index again revealed that Läns- Söderberg & Partners named the Läns- försäkringar has Sweden’s most satisfied customers in a number of försäkringar Global Hållbar fund one of categories in banking, insurance and real-estate brokerage services. Sweden’s top ten sustainable funds in May For the fourth consecutive year, Länsförsäkringar won the Swedish 2017. For this fund, the sustainability analy- Brand Award for best brand in the industry and, according to Universum, sis is equally as important as the financial Länsförsäkringar is the best employer in the industry. The mobile app analysis. The companies in which the fund won the international design competition Red Dot Award in the cate- invests are companies that are already, or gory of “apps and finance” and a Web Service Award. are on their way to becoming, highly promi- nent in the field of sustainability and can document clear, positive changes.

Agria in France Agria is growing. A partnership with the French Kennel Club was initiated during the year. Operations will begin in spring 2018 with an office in Paris, meaning that Agria will then be represented in six countries: Sweden, Norway, Denmark, Finland, the UK and France.

Non-life insurance, premiums Continued strong earnings earned: SEK 26 billion The Länsförsäkringar Alliance is reporting another year of strong earnings for 2017. Operating profit Bank’s business volumes: for non-life insurance operations increased to SEK SEK 520 billion 7.1 billion, after bonuses and discounts to customers amounting to SEK 1.8 billion. Investment income Managed assets in unit-linked increased to SEK 7.0 billion and the technical result insurance: SEK 128 billion strengthened to SEK 2.5 billion, with growth in premiums of 6% and a combined ratio of 92%.

Excellent capital situation Bonuses The regional insurance companies are very well-capitalised with an average solvency ratio of 215% and discounts on 31 December 2017. The Länsförsäkringar AB Group and its subsidiaries continued to have a healthy capital situation in 2017. to customers Solvency ratio on 31 December 2017 Based on the healthy earnings, the % regional insurance companies pay 300 back a total of SEK 1.8 billion in 250 bonuses and discounts to their owners – the customers. 200

150

100 50 SEK bn 0 LänsförsäkringarLänsförsäkringarLänsförsäkringar Sak Fondliv Liv 23 regional insurance companies

Länsförsäkringar Alliance 2017 The year in brief 1 Strong earnings and continued market successes

Comments. The Länsförsäkringar Alliance can sum up another successful year of strong earnings and continued market successes. Based on the year’s healthy earnings, the regional insurance companies pay back SEK 1.8 billion in bonuses and discounts to their owners – the customers.

Economic optimism in a time of political of new-builds may have accelerated this profit of SEK 1.0 billion, where both Agria instability scenario. An increase in the number of and health business continued to make pos- In general, the global economy was surpris- households repaying their mortgages and itive contributions to the earnings trend. ingly stable in 2017, particularly in light of the a correction to housing prices are healthy During the year, Agria initiated a partner- political risks that dominated the news. The developments. However, further action is ship with the French Kennel Club and when largest surprise was Europe’s performance needed to improve turnover in the housing operations are established in France in where the economy clearly surged and market and to make it easier for those spring 2018, Agria will be represented in five growth exceeded expectations. The US econ- groups that face difficulties in entering the countries outside Sweden. omy also trended positively, particularly the market. Even if households have favourable Operating profit for the banking opera- strong labour market. tions increased 9% to SEK The fixed-income mar- 1.6 billion due to a contin- ket reported no major uously rising customer fluctuations during the Continuous improvements in inflow. Mortgage lending year and stock mar- customer satisfaction are vital increased 17% with con- kets generally posted tinued high credit quality. a favourable trend, led to our success. Operating profit for by emerging markets. the unit-linked insurance This was reflected both operations increased to in the Länsförsäkringar Alliance’s strong conditions to pay their loans, the risk that SEK 0.6 billion and managed assets investment income of SEK 7.0 billion and households with a high level of loans may increased 12% to SEK 128 billion, benefiting Länsförsäkringar’s high investment return cut back on consumption in a major from both a positive net inflow and healthy for managed pension insurance and life economic downturn is seen as a macro value growth trend. assurance. economic risk looking forward. Since the Länsförsäkringar AB Group’s The Swedish economy also performed capital situation has strengthened in recent strongly during the year; growth was sur- Continued strong earnings years in relation to the Group’s capital prisingly positive, the labour market contin- and healthy growth targets, the Board of Länsförsäkringar AB ued to improve and inflation rose. Never The Länsförsäkringar Alliance continued to proposes a dividend of SEK 300 M to the theless, the Riksbank decided to wait out report strong earnings for 2017. The Group’s owners. interest rate increases, and the repo rate total operating profit amounted to SEK 8.4 Alongside healthy growth and strong has been negative for almost three years. billion. earnings, we saw additional signs of the Continued expansive signals from the Riks- Länsförsäkringar continued to dominate strength of our brand in 2017. Surveys bank, a stronger EUR and a degree of con- the Swedish non-life insurance market in placed Länsförsäkringar among the most cern regarding the Swedish housing market 2017, and its market share grew further to reputable brands in Sweden and the Swedish underpinned this trend. The risks regarding 31%. Operating profit for non-life insurance Quality Index showed that we have Swe- housing prices and household indebtedness operations increased to SEK 7.1 billion, after den’s most satisfied customers in banking, were behind the decision by the Swedish bonuses and discounts of SEK 1.5 billion and private non-life insurance and real-estate Financial Supervisory Authority to introduce SEK 0.3 billion, respectively, from regional brokerage. stricter mortgage repayment requirements insurance companies to customers. Invest- for households with a high level of debt. ment income strengthened to SEK 7.0 bil- Long-term plan to deliver Housing prices were considerably lion and the technical result increased to local customer promises weaker than normal and excluding seasonal SEK 2.5 billion, with growth in premiums of The regional insurance companies jointly variations fell 5.3% in the second half of the 6% and a combined ratio of 92%. Non-life own Länsförsäkringar AB, which is tasked year. Stricter repayment requirements insurance operations within the Länsförsäk- with offering the companies the best possi- combined with a temporarily high number ringar AB Group contributed an operating

2 Comments by the President Länsförsäkringar Alliance 2017 ble conditions to develop their offering raise our sights – we must create the pre- towards the goals are important for achiev- close to their customers. requisites for customer experiences that ing the SDGs and we can see here that we A new long-term business plan for Läns- are among the very best, regardless of continue to have an important role to fill. försäkringar AB was produced in 2017. The industry. Only then can each regional insur- Work on the SDGs will continue in 2018. plan aims to define how Länsförsäkringar AB ance company deliver its customer promise Our efforts on responsible investments can become even better at helping each – simplifying everyday lives for people and led to high ratings from external advisors regional insurance company to best leverage contributing to a secure future. such as Söderberg & Partners and Max the strength of the entire Länsförsäkringar Matthiessen. Our global sustainability fund Alliance in an increasingly digitised world. UN Sustainable Development Goals was named one of Sweden’s most sustain- For the regional insurance companies, Läns- part of sustainability activities able funds. försäkringar AB is the partner that supports In 2017, we started to review how Läns- them in realising the customer promise and försäkringar’s operations can contribute to The regional insurance companies and delivering the offering expected by custom- the UN Sustainable Development Goals Länsförsäkringar AB will continue to ers. Experience shows that Länsförsäkring- (SDGs). Much of what we currently do is develop from a position of strength and ar’s local business model combined with already well-aligned with these goals. together build an even stronger federation. joint strength creates substantial added Claims-prevention measures for people, value for customers. Our success lies in the animals and property and responsible Stockholm, March 2018 balance between these two. repairs are important parts of reducing the On behalf of the 23 regional insurance Our shared strategic objectives were impact on the climate and environment. companies drawn up based on the Länsförsäkringar Another contribution is making the Alliance’s strategies, plans and targets. research financed and conducted through Both our processes and what we develop Länsförsäkringar’s Research Fund available must be based on the expectations and to all. We can also make a positive contribu- Sören Westin requirements of the regional insurance tion through our investing activities and President and CEO of Länsförsäkringar AB companies’ customers. To continue to in our role as a lender. Engaging with policy- address customer needs in a rapidly makers, customers, employees and other On 2 February 2018, Johan Agerman left his position as President and changing business environment, we have to players in society and working together CEO of Länsförsäkringar AB. In connection with this, Sören Westin was appointed President and CEO of Länsförsäkringar AB.

Länsförsäkringar Alliance 2017 Comments by the President 3 Success lies in the balance between local and shared

About Länsförsäkringar The 23 customer-owned regional insurance companies cooperate and combine the ability of a small company to understand customers with the advantages of economies of scale generated by an alliance. Everything is based on the experience that local decision-making authority combined with joint resources create added value for customers.

Länsförsäkringar’s position in the Swedish insurance companies. The leading position Strong brand and satisfied customers insurance and banking market is the result in the non-life insurance market has been The strengthening of the Länsförsäkringar of the development of a company group strengthened during the year. Länsförsäk- brand is the result of consistent and long- that for more than two centuries has not ringar holds more than 30% of the non-life term work on brand and values. The brand had any other principal than its own cus- insurance market in Sweden. The life-assur- remains extremely strong compared with its tomers. Closeness, simplicity and local cus- ance operations have a distinct focus on competitors in the banking, insurance and tomer ownership have built up the success being the best pension partner for corpo- pension industry. Kantar Sifo’s 2017 reputa- of the non-life insurance operations over rate customers and private individuals. tion survey showed that Länsförsäkringar two centuries and been transferred to the Banking operations are growing consider- has the highest reputation in the insurance financial and real-estate brokerage ser- ably, particularly among existing insurance industry and the sixth highest reputation of vices. customers. Real-estate brokerage has gone all Swedish companies, with Volvo and Ikea A complete range of banking and insur- from zero to the third largest brokerage in topping the list. Länsförsäkringar has held a ance services is offered through 23 inde- Sweden in only a few years – a good exam- high ranking in the Swedish Quality Index pendent and customer-owned regional ple of the strength of the brand. survey for many years, which measures how

million customers/owners regional insurance companies

E AND SA VIC LES AD Bank Insurance Pension Real-estate brokerage

L N A O I I M T S N A E D EV JU R S S P TM IM ENT AND CLA

of the regional insurance companies have the same clear purpose for their Owner control ownership, conduct active operations and collectively hold sufficient finan- Länsförsäkringar AB is a limited liability company and also the Parent Com- cial capacity to ensure long-term ownership. pany of a financial Group, which is individually owned in various holdings by the 23 regional insurance companies and 16 local insurance companies, which Owner control logic in turn are owned by a total of 3.8 million insurance customers. The Boards The logic behind owner control centres mainly on the relationship between of Directors of the regional insurance companies are formally responsible the Boards of the regional insurance companies, the Länsförsäkringar AB for owner control. Based on the federal organisation and the purpose of the Board of Directors, Länsförsäkringar AB’s General Meeting and the regional ownership of Länsförsäkringar AB, these companies have together created insurance companies’ owner consortium. Formal owner control takes place joint forms for owner control that comply both with the requirements usually through the General Meeting, although the regional insurance companies’ imposed on owner control and with the federal conditions. owner consortium and their representation on Länsförsäkringar AB’s Board Owner control at Länsförsäkringar AB has clear advantages compared are also important components. The duties of the General Meeting are with the owner control of many larger financial groups. This is because all formally governed by law and the Articles of Association. The duties of the

4 About Länsförsäkringar Länsförsäkringar Alliance 2017 satisfied customers are with their bank and served and instead all surpluses can be joint strategies. Together, the Länsförsäk- insurance company. The most recent survey returned to customers in the form of ringar Alliance has developed a balance showed that Länsförsäkringar has highest bonuses and discounts. between the small and the large-scale. customer satisfaction in banking, private Cooperation through Länsförsäkringar AB non-life insurance and real-estate broker- Balance between local and shared has emerged from a decentralised perspec- age services in the country. Cooperation between the regional insur- tive, not the other way round. The local ance companies takes place through Läns- companies decided to cooperate to achieve Local customer-owned companies försäkringar AB and its subsidiaries, whose economies of scale and to concentrate on Each individual regional insurance company task is to create the necessary prerequi- the most important issue: meetings with is owned by its non-life insurance custom- sites for the regional insurance companies customers. The basis for cooperation in the ers, which means that the company’s capital to be successful in their respective markets Länsförsäkringar Alliance is that as much of belongs to its customers. With the cus- by conducting business, service and devel- the operations as possible are conducted tomer as owner and the only principal, there opment operations, and to assume respon- by the local companies and essentially all are no external shareholder interests to be sibility for the Länsförsäkringar Alliance’s customer contact take place with them.

Owner control of Länsförsäkringar AB Länsförsäkringar AB

RSÄKRINGA Länsförsäkringar Sak Försäkrings AB FÖ R A NS RAL MEE B Ä NE TIN ’s L GE G

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R K N R D R I I L E N A N G N W Länsförsäkringar Liv Försäkrings AB* AR O O A GI S B’s RE IE AN COMP * The company is operated according to mutual principles and is not consolidated in Länsförsäkringar AB.

consortium are governed in the regional insurance companies’ consortium tee and the Board. The Nomination Committee works independently from agreement. The Chairman of the consortium is appointed by the regional the Board on behalf of the owners. insurance companies. Länsförsäkringar AB’s Board serves as the representative of the owners Länsförsäkringar AB’s Board is elected by the General Meeting, which in the framework of the owners’ intentions. Länsförsäkringar AB’s Board comprises representatives of all shareholders. The Board is elected based pursues the strategies and targets that the owners agree on, thus perform- on a process controlled by the owners through a Nomination Committee ing the owners’ assignments. At the same time, Länsförsäkringar AB’s Board appointed by the General Meeting. The Nomination Committee’s composi- has a major responsibility for safeguarding the capital invested in Läns- tion, mandate period and so forth are governed in the Articles of Associ- försäkringar AB by the regional insurance companies. The regional insurance ation. The Chairman of the consortium is responsible for the process of companies’ assignment to Länsförsäkringar AB’s Board is decided in the renewing the Nomination Committee. consortium and is documented in the Länsförsäkringar Alliance’s gover- The task delegated by the owners to the Nomination Committee is nance documents. Länsförsäkringar AB’s Board decides on the direction documented in a separate instruction adopted by the General Meeting. It is and scope of the operations based on its assignment from the owners. important that there is a clear boundary between the Nomination Commit-

Länsförsäkringar Alliance 2017 About Länsförsäkringar 5 Quick guide to our offering

Business area

Market shares Non-life insurance, premiums paid Non-life insurance Source: Insurance Sweden Länsförsäkringar is the market leader in non-life insurance in Sweden with a Länsförsäkringar 30.8% market share of 31%, with a market leading position in commercial, homeowner, If 18.5% Folksam 15.7% motor and pet insurance lines. Most of the Länsförsäkringar’s non-life insur- Trygg-Hansa 14.6% ance business is underwritten locally by the regional insurance companies. Länsförsäkringar Moderna 3.2% AB is responsible for the non-life insurance operations, as assigned by the regional insur- Dina Federation 2.7% ance companies to be operated jointly to complement the companies’ offering with Captive companies 2.3% specialist products to meet customer needs, to start new business that can be channelled Other 12.2% out to the regional insurance companies, and to manage the Länsförsäkringar Alliance’s joint reinsurance cover. Pet-insurance operations are conducted in the subsidiary Agria Djurförsäkring. Read more on pages 20-27.

Market shares Retail mortgages Banking Source: Statistics Sweden Länsförsäkringar Bank offers banking services to private individuals, agricul- Länsförsäkringar 6.3% tural customers and small businesses. Sales, advisory services and customer Swedbank 24.4% Handelsbanken 22.7% service are carried out through the branches of the regional insurance compa- SEB 14.2% nies and via digital channels and by telephone. Deposits and certain lending operations are Nordea 14.2% conducted in Länsförsäkringar Bank, while most of the lending and funding operations are Danske Bank 3.5% conducted through the subsidiary Länsförsäkringar Hypotek. The subsidiary Länsförsäk- SBAB 8.0% ringar Fondförvaltning offers mutual funds. The subsidiary Wasa Kredit offers financing Other 6.7% services to corporate customers and private individuals – primarily leasing, renting and hire purchase. Länsförsäkringar Bank is the fifth largest retail bank in Sweden. Read more on pages 28-34.

Market shares Unit-linked insurance, individual Life assurance and pension insurance occupational pensions, premium income. Länsförsäkringar offers pension savings, primarily occupational pensions. Source: Insurance Sweden Fund management, guarantee management and personal-risk insurance are Länsförsäkringar 18.7% offered through Länsförsäkringar Fondliv. Länsförsäkringar Fondliv is a leader SEB 16.8% SPP 12.9% in the unit-linked insurance market for individual occupational pensions, commanding Skandia 12.8% a market share of 19%. No new policies are underwritten in Länsförsäkringar Liv, but the Movestic 9.0% company manages traditional life assurance that was taken out before it was closed in 2011. Handelsbanken 7.2% Länsförsäkringar Liv is operated according to mutual principles and is not consolidated in Swedbank Försäkring, 6.8% Länsförsäkringar AB. Read more on pages 35-39. Danica 5.6% Nordea Liv 4.9% Folksam 2.6%

Market shares Real-estate brokerage, single-family homes. Real-estate brokerage Source: Värderingsdata

Länsförsäkringar offers real-estate brokerage though Länsförsäkringar Fastig Länsförsäkringar Fastighets- hetsförmedling. The operations are conducted in franchise form, whereby förmedling 11.5% Fastighetsbyrån 25.7% the regional insurance companies act as franchisers for the 160 local branches Svensk Fastighetsförmedling 14.6% across Sweden. This means that Länsförsäkringar Fastighetsförmedling differs from other Mäklarhuset 4.8% national estate-agent chains by always being locally based. Länsförsäkringar Fastighets- SkandiaMäklarna 3.9% förmedling is the fastest-growing estate-agent chain in Sweden and is today the third Bjurfors 3.2% largest company with a market share of 12%. Read more on page 40. HusmanHagberg 3.1% Mäklarringen 1.5% Hemverket 1.4% ERA 1.3% Other brokers and private 29.0%

6 Offering Länsförsäkringar Alliance 2017 Earnings 2017

Operating profit amounted to SEK 7,078 M (4,626). Premiums earned after ceded reinsurance rose 6% to SEK 25,504 M (24,073).

Combined ratio

Operating profit increased 9% to SEK 1,599 M (1,467). The return on equity totalled 10% (10).

Increase in business volumes to SEK 520 billion

Managed assets in unit-linked insurance A Länsförsäkringar customer and traditional life assurance amounted to SEK 128 billion and SEK 115 billion, Far away yet always respectively. close at hand

Entrepreneur Jakob Martinsson is a satisfied customer of Länsförsäkringar Jämtland - despite his nearest bank branch Increase in premium income for unit-linked being 60 km away and his business advisor 170 km away. insurance to SEK 9,133 M

I do most of my banking myself online or get A total of 21,801 (19,938) properties were good help via telephone banking. We chose this brokered in 2017, of which 11,896 (10,923) bank because we had the best contact with the tenant-owned apartments and 8,816 (7,998) personnel at the branch in Åre. Länsförsäkringar single-family homes. has a fantastic Internet bank that I’m very happy with. I also have my insurance with Länsförsäkringar and do everything via the app. I recently used it to report a claim for my car. I prefer to talk to someone in person to discuss loans or investments. Our bank contact is always the same person who knows us so we don’t SEK bn need to start from scratch every time,” says Jakob. Total sales value

Länsförsäkringar Alliance 2017 Offering 7 Drivers and trends in our business environment

Our business environment Drivers and trends in our business environment affect future customer requirements and thereby Länsförsäkringar’s operations, business model and development needs. This presents many challenges but Länsförsäkringar has favourable conditions to best meet changed needs, primarily based on its broad customer base, local knowledge and highly skilled employees. Customers Technology

More and more customers are seeking security from a supplier that Rapid technological progress brings with it new insurance solutions they have confidence in, making the brand a key cornerstone of the and new business opportunities. Traditional competition is being customer experience. To deliver products and services that meet continuously challenged by new and innovative fintech companies. customer expectations, the supplier must understand customer needs and behaviour, and base development activities and customer Internet of Things contact on customer insight. Strong growth is predicted for sales for the Internet of Things over the next few years. More and more objects are becoming con- On the customer’s terms nected, and new business opportunities arise with telematics in the Customer requirements for banking and insurance services are car, at home, at work and with people. The possibilities for using continuing to intensify since they presume that progress is just as data include greater relevance, improved risk assessment, individu- advanced as in other industries. 24/7 availability, a high level of ser- alised products, claims prevention and predictive analysis for pre- vice, skilled personnel and personal service are important to cus- venting claims. However, the risk of cyber crime is on the rise since tomers who want to be able to choose where, when and how they the large number of connected devices increases data exposure. do their banking and insurance. New technology could also make insurance unnecessary. The The sharing economy that is emerging involves using resources conditions for motor insurance are changing. Surveillance systems sustainable and economically. There is also a desire to remove “the to make Swedish homes burglar, fire and waterproof are becoming middle man” and technology is enabling new consumption models. more affordable. The development of fireproof materials can signifi- Sharing a taxi, home, car, ideas and borrowing what you can, are cantly reduce the need for fire insurance. becoming increasingly common to maximise comfort and flexibility at minimal cost. These new arising needs present new business opportunities for banking and insurance.

Länsförsäkringar’s response Länsförsäkringar’s response

Länsförsäkringar has favourable conditions to best meet customer Development activities must be innovative with fast product devel- needs, primarily founded on our broad customer base, local knowl- opment and testing operations to deliver new services quicker and edge and our unique business model that supports both local and at a lower cost and then continuously test and fine-tune them. Part- digital customer meetings. The award-winning bank app adds signif- nerships and investments in innovation companies supplement such icant customer value. The starting point is always the customer and development efforts. Länsförsäkringar will continue to develop we base communication on customer data and thus on knowledge. robotics and automation to enhance efficiency. New technology We must be innovative and find the right balance and forms of also allows customer data to be processed together with social data cooperation within the Länsförsäkringar Alliance; while the cus- to learn more about customers and the market, with Länsförsäk- tomer experience must always be local and close, developments ringar’s broad customer base and product offering providing a can be made together. major advantage.

8 Our business environment Länsförsäkringar Alliance 2017 Climate change Regulations

Climate change – the result of higher carbon emissions – causes Regulatory development will continue to have a significant impact global warming. A warmer climate will have major socio-economic on banks and insurance companies over the next few years. Exam- consequences, and lead to extreme weather conditions such as ples of major regulations are the Fourth Anti-Money Laundering hurricanes, torrential rain and drought. Directive, the Mortgage Credit Directive, MiFID II, the General Data Protection Regulation (GDPR) and the Insurance Distribution Direc- Long-term environmental responsibility tive (IDD). The consequences of climate change for the insurance industry are obvious since global warming can lead to significant claims costs. Rapid regulatory developments continue That is why claims-preventing environmental work is increasingly New EU regulations on data privacy and processing personal data important. will be introduced to all companies and institutions in 2018 with the It is a hygiene factor for a rising number of investors that the GDPR. Reviews of the group rules for banks and regulations for cri- companies they invest in comply with internal conventions on human sis management in banks are being conducted. In life assurance and rights, labour, the environment and anti-corruption. Fossil fuel has a pension insurance, discussions are continuing on regulating trans- negative effect on the climate through its high carbon emissions. fer rights and introducing new rules on occupational pension busi- There is a risk that oil, coal and gas companies are overvalued since ness and taxation of occupational pensions as well as new informa- it is unlikely that a large amount of the fossil reserves will be tion requirements for investment products within the framework of extracted from the ground due to legislation to limit global warming. insurance. The government has also referred a proposal to the Overvalued holdings are a financial risk and have led to many inves- Council on Legislation for consideration on fringe-benefit taxation tors starting to phase out fossil fuels from their investments. Pres- for health care insurance, which is expected to come into effect on sure has mounted on investors to move over to investments that 1 July 2018. help reduce climate risks. The Swedish Financial Supervisory Harmonising legislation within the EU also adds to complexity. Authority expects the finance industry to develop scenario analyses Extensive rules are often implemented in the form of both directives for how climate change will impact business operations. The govern- and EU regulations. In addition, guidelines are published by Euro- ment’s target is for Sweden to become fossil-free by 2030. pean supervisory authorities and the Swedish Financial Supervisory Authority issues regulations and general guidelines.

Länsförsäkringar’s response Länsförsäkringar’s response

Climate risk is the area of sustainability that presents the greatest Länsförsäkringar believes that it is well-positioned to meet the challenge for Länsförsäkringar. We strive to limit and reduce the changes under the regulations. It is vitally important that consum- risk of climate impact through our activities by way of dialogue and ers are protected but the regulations between banking and insur- investments in the area of responsible investments, claims-preven- ance must also be harmonised, which is particularly important for tion activities and sustainability requirements on damage repair in a group like Länsförsäkringar. Health care insurance supports the insurance offering, sustainability requirements on suppliers, employers’ health and safety activities and serves as a health- financing research into climate impact, engagement and prevention promoting and rehabilitating measure and should therefore be activities in the aspects of long-term environmental efforts and taxed like similar measures. More than half of Länsförsäkringar’s social commitment. total number of health care insurance policyholders belong to the low or middle-income bracket.

Länsförsäkringar Alliance 2017 Our business environment 9 A simpler everyday life and a more secure future

The brand Länsförsäkringar is one of the strongest brands in Sweden. Based on a brand promise, which is to simplify everyday life and contribute to a secure future, the 23 regional insurance companies use a shared brand platform to live up to this promise.

Promise Mission We simplify your everyday life Customer value first and contribute to a secure future

Länsförsäkringar makes a promise to its customers The regional insurance companies are owned by to contribute to a simpler everyday life and a more their customers. Accordingly, customers are the secure future. With local presence, the regional insu- main driving force. Any value created is returned rance companies can understand their customers’ to the customers and the society in which they situation and can meet their needs, using channels live and work. chosen by the customers. By being locally owned by the customers, and not having any other interests, the regional insurance companies promise long-term stability.

Core values Position Close, committed and simple Most customer friendly

Länsförsäkringar is to be close to the customer Being a customer with Länsförsäkringar is simple and by always reflecting and acting from a customer easy. Länsförsäkringar shall be accessible and offer perspective. Länsförsäkringar’s commitment for services that are easy to understand and use, in the greater customer value sets us apart from our channels chosen by the customer. competitors. Länsförsäkringar is to be uncomplicated, unbureaucratic and easy to understand. Länsförsäkringar stands for what its says and ensures its promises are implemented – we are on the customer’s side.

10 The brand Länsförsäkringar Alliance 2017 We make and keep a joint promise in 23 regional accents.

Länsförsäkringar Alliance 2017 The brand 11 Secure business for customers and a sustainable society

Sustainability Länsförsäkringar’s mission dates back more than 200 years. The basis of this mission is respect for customers’ security. Länsförsäkringar firmly believes that a responsible banking, insurance, pension and real-estate brokerage offering enhances value for customers and contributes to the sustainable development of society.

Local and long-term responsibility

The starting point of Länsförsäkringar’s sustainability efforts is local ried out in addition to Länsförsäkringar’s more long-term social initiatives in claims and long-term responsibility in society since the regional insurance prevention and damage repairs, such as part- companies are local and customer-owned. Claims-prevention activ- nerships with sports associations, civil soci- ities are a priority for both customers and local society. Länsförsäk- ety organisations, schools, colleges and uni- ringar AB has various partnerships and conducts research that leads to versities, municipalities, etc. These initiatives are often long-term efforts undertaken in a sustainable society. Maintaining a strong, local commitment not only the local community to encourage construc- benefits Länsförsäkringar’s own customers but also society as a whole. tive leisure time for both young and old people, ensure a secure local environment and The local regional insurance companies’ ment and research. Preventing claims involv- improve customers’ and local communities’ social commitment is extensive. Länsförsäk- ing people, animals, property, forests and awareness in order to maintain a safe and ringar’s long-term work in society mainly land and offering optimal sustainable damage sustainable environment. Contributing to a takes place in the areas of claims-prevention repairs is inherent in environmental and safe and secure environment and surround- activities, claims adjustment, social commit- social responsibility. Other activities are car- ings is fundamental to Länsförsäkringar.

12 Sustainability Länsförsäkringar Alliance 2017 Social commitment 2017

The regional insurance companies actively 11. Länsförsäkringar Södermanland support various types of social commitment •• Supports initiatives through Jubileumsfonden to increase security and integration among children. throughout Sweden. A brief selection is pre- •• Supports activities through Omtanke Sörmland to cre- sented below. ate meaningful recreation for children and young people. 1 •• Holds safety days for children together with the police 1. Länsförsäkringar Norrbotten and emergency services. •• Sponsors House of Heroes – accommodation for fami- 12. Länsförsäkringar Göteborg och Bohuslän lies of critically ill children receiving care far from home. •• Employees are involved in Mitt Liv, Junior Achievement •• Climate compensates through two international proj- Sweden and My Dream Now. ects with ZeroMission. 2 •• Finances two safety patrollers in socially disadvan- 2. Länsförsäkringar Västerbotten taged areas to increase social inclusion for children and young people. 3 •• Works together with Västerbotten Football Association 4 to introduce green cards. •• Main partner of IFK Göteborg football club and sup- •• Sponsors House of Heroes – accommodation for fami- ports initiatives to bring up young people in a positive lies of critically ill children receiving care far from home. supporter culture.

3. Länsförsäkringar Jämtland 13. Länsförsäkringar Skaraborg •• Awards the prize of children’s rights champion of the •• Works together with the Habo Wolley integration proj- year together with Save the Children. ect where young people born in Sweden act as mentors •• Works together with Parasport to create opportunities to new arrivals. 6 5 for disabled children to participate in sports. •• Supports sports clubs for disabled people. •• Awards the prize of sustainable company of the year •• Supports handball cup and Fair Play green card. 8 and involved in the Enterprise Agency. •• Involved in new enterprise organisation to encourage more people start their own company. 9 4. Länsförsäkringar Västernorrland 7 10 • 14. Länsförsäkringar Östgöta • Supports businesses and universities, such as Junior 13 Achievement Sweden, Enterprise Agency and Mid Swe- •• Awards the Östgötapriset prize to initiatives that 15 11 den University. improve community spirit and security in Östergötland. 14 •• Sponsors sports for children and young people, and •• Partners with football clubs on attitudes on and off the teams playing in the highest division. pitch in the Respect in Football programme. 12 •• Sponsors House of Heroes – accommodation for fami- •• Involved in the #starkaretillsammans initiative to help 17 16 lies of critically ill children receiving care far from home. new Östergötlanders in society. Provides mentors and offering training in banking and insurance. 18 5. Länsförsäkringar Gävleborg 19 20 •• Works together with associations that promote exer- 15. Länsförsäkringar Älvsborg 21 cise and leisure activities for children and young peo- •• Sponsors and engages with sports clubs to promote 22 ple, inclusion and the value of being a friend. secure clubs. Trains sports coaches together with 23 •• Partners with Brynäs IF ice hockey team and Unicef on Friends. social activities to create internships for young people. •• Partners with Räddningsmissionen and Erikshjälpen in the Solrosen project to support children and young 6. Dalarnas Försäkringsbolag people with family in jail. 20. Länsförsäkringar Kalmar län • •• Supports Dalarnas Spelmansförbund, which educates •• Promotes anti-bullying in preschools and schools by • Arranges Samtalsforum Framåtblick, which links young people about local music traditions. distributing tools for having difficult conversations in research with society for the practical application of •• Supports Glimma, which helps change family lifestyles seven municipalities. research results at local level. focusing on obesity among children and young people. •• Sponsors clubs and cultural activities, and contributes •• Initiated Young Referee for empowering young referees 16. Länsförsäkringar Gotland to involvement and equal opportunity. and highlighting their role. •• Contributes to Skolfonden on school projects focusing •• Supports local mussel farming for a healthier Kalmar on core values and equal treatment. Strait. 7. Länsförsäkringar Värmland •• Awards the prize of Gotland’s Hero to one or more peo- •• Awards the prize of food entrepreneur of the year. ple who deserve acknowledgement for their selfless 21. Länsförsäkringar Blekinge • •• Safe Way to Sports – offering sports clubs training in and kind acts. • Sponsors a car for Vägga School’s vehicle and trans- road safety for children aged 11–13. •• Supports football through Kvartersligan to encourage port programme. • children to be more active. • Created a grant for upper-secondary school pupils at 8. Länsförsäkringar Uppsala two schools with a focus on industrial jobs involving • • Sponsors floorball training for children and young 17. Länsförsäkringar Jönköping engineering. people with disabilities. •• Sponsors summer football schools to give young peo- •• Created a sustainability prize to highlight the sustain- • • Sponsors Ronjabollen which supports girls living under ple meaning full recreation in the holidays. ability work of companies, organisations or people. honour-related norms and restrictions. •• Instigated an award for food contractor of the year in •• Works to prevent bullying, drugs and racism among Jönköping county to highlight locally produced food. 22. Länsförsäkringar Göinge-Kristianstad • 12 year olds through Schysst framtid. •• Financed a quick-charge pole together with Tranås • Supports Tusen röster för Nordöstra Skåne, which •• Equal sponsoring initiative and Fair Play certification. energi. focuses on Young people’s view of the future. Activities include workshops on equality, accessibility, discrimi- 9. Länsförsäkringar Bergslagen 18. Länsförsäkringar Halland nation, the environment and climate. • • Sponsors leisure activities for children and young peo- •• Holds CSR workshops to train companies in Halland to •• Arranged a seminar on increasing diversity in schools ple through Bergslagslyftet. become more sustainable. during the Almedalen political week. • • Awards prizes with LRF Konsult for food entrepreneur •• Involved in the county administrative board’s integra- •• Arranged a pitch marathon at “Sweden’s best business of the year in Örebro and Västmanland counties. tion efforts and hired a person on a project basis to day” where young entrepreneurs could present their 10. Länsförsäkringar Stockholm explain banking and insurance in Sweden to new arrivals. ideas, companies and projects. •• Partners with Stockholm Football Association and •• Distributes reflector tags to the local population. 23. Länsförsäkringar Skåne sponsors the S:t Eriks Cup’s Fair Play green card. 19. Länsförsäkring Kronoberg •• Supports Ung Aktiv 9 and MFF in their work on creating • • Supports Fryshuset. Employees have joined the Lugna •• Collaborates with Växjö Lakers on security, consider- active and productive everyday lives for young people. Gatan street crime prevention project on the under- ation and inclusion in ice hockey for children and young •• Sponsors Live it up, an leadership programme for ground and arranged a Christmas present event for the people. young women. Children of Single Mothers initiative. •• Awards an annual sustainability prize for extraordinary •• Participates in Sustainable Sea for the Baltic Sea to work. This year’s winner was Öster i samhället, which raise Stockholmers’ environmental awareness. works towards a sustainable society. •• Arranges Framtidsdagen – a regional forum on sustainability for business owners.

Länsförsäkringar Alliance 2017 Sustainability 13 Claims-prevention activities in 2017

The regional insurance companies actively 9. Länsförsäkringar Bergslagen support claims-prevention activities •• Arranges customer events on how to renovate correctly. throughout Sweden. A brief selection is •• Safe Farm and Safe Horse Farm – provides advice for presented below. how customers can reduce accidents on their farms. 1 •• Participates in Sweden’s largest fire drill. 1. Länsförsäkringar Norrbotten •• Distributes reflective vests to preschool children in •• Distributes reflective vests to preschool children in 23 municipalities. Norrbotten. •• Hands out water alarms when inspecting newly insured 10. Länsförsäkringar Stockholm houses. •• Distributes reflective vests to preschool in the county. 2 •• Holds training courses in CPR on children in partner- •• Conducts claims-prevention inspections when new ship with the Fire Protection Association and homeowner insurance is taken out. 3 emergency services. •• Supports claims-prevention programmes for commer- 4 •• Partners with Verisure to increase the number of cial traffic and agriculture. households with fire and burglar alarms. •• Participates in Sweden’s largest fire drill.

2. Länsförsäkringar Västerbotten 11. Länsförsäkringar Södermanland •• Conducts regular farm inspections. •• Distributes reflector tags and reflective vests to •• Distributes reflective vests to inhabitants customers. •• Arranges information events with tips and advice for •• Work together with the police and emergency services 5 preparing vacation homes for the winter. 6 to reduce crime and increase security via Neighbour- hood Watch. 3. Länsförsäkringar Jämtland 8 •• Collects environmentally harmful waste from farms •• Distributes free reflective vests to preschools. 9 of agricultural customers. •• Preventive measures to reduce water damage and help 7 10 customers install water leak detection systems. 12. Länsförsäkringar Göteborg och Bohuslän 13 11 •• Awards a prize for metal workshop of the year to 15 •• Conducts safety visits at customers’ homes to identify stimulate eco-friendly and safe care repairs. 14 potential claims risks, focusing on fire, water and

burglary. 4. Länsförsäkringar Västernorrland 12 •• Invites customers to know-how events and sends out •• Supports Sotarprojektet Övik. 17 16 claims-prevention tips and advice. •• Prevents water damage in kitchens by installing water alarms in customers’ homes. 18 13. Länsförsäkringar Skaraborg 19 20 •• Organises information meetings with builders and con- •• Provides tips and advice to customers to reduce the tractors in the county to increase know-how in water 21 risk of water damage, fire and burglary. damage and fire risk. 22 •• Provides tips and advice to customers to reduce the 23 risk of theft and vandalism. 5. Länsförsäkringar Gävleborg •• Participates in safety patrols with the municipality, •• Arranges home visits to customers to prevent claims. police and associations in towns. •• Partners with Sandvikens IF to arrange night-time 19. Länsförsäkring Kronoberg •• Trains parents in ABC (Airway, Breathing, and football matches, dances and city patrollers for inclu- •• Security information for 30-plus neighbourhood watch Circulation). sion and security. organisations. •• Offers training in CPR on children. •• Collaborates with the police and Markaryd municipality 14. Länsförsäkringar Östgöta •• Contributes to 300 sports coaches receiving CPR to encourage inhabitants to DNA-label their valuables. •• Distributes reflector tags to pedestrians, zip lights to training via Swedish Lifesaving Society and Gävleborgs •• Activities to reduce the incidence of water damage by school children and reflective vests to cyclists. Idrottsförbund. offering leak detection systems. •• Road Safety Day where transport programme pupils receive road safety information and test-drive heavy 6. Dalarnas Försäkringsbolag 20. Länsförsäkringar Kalmar län vehicles in icy conditions. •• Arranges home visits to customers, farms and companies •• Distributes reflective vests to preschools and holds •• Partners with various organisations to reduce bicycle focusing on water and fire safety and burglar security. first aid courses for parents theft, for example, through security marking. •• Participates in the Dalarnas Villa project, which has •• Neighbourhood Watch partner with local police and developed upper-secondary vocational courses municipalities. 15. Länsförsäkringar Älvsborg together with Dalarna University. •• Participated in Wild Animal Week – safer roads, •• Claims prevention tips for bikes and yachts. •• Participates in Sweden’s largest fire drill. together with the police and emergency services, with •• Participates in Sweden’s largest fire drill. claims-prevention advice, distributed reflective vests 7. Länsförsäkringar Värmland and warning stickers. 16. Länsförsäkringar Gotland •• Inspects single-family homes with OCAB and performs •• Claims-prevention activities in water, fire and motor electrical inspections at farms with ÅF. 21. Länsförsäkringar Blekinge third-party liability claims. •• Arranges customer training courses for driving in icy •• Distributes reflective vests to preschool children. •• Partners with the Swedish Lifesaving Society on sum- conditions. •• Partners with the police, emergency services and the mer swimming schools on the island. •• Trains suppliers in structural engineering to ensure Federation of Swedish Farmers on “Safe Town” and •• Partners with Gotland driving practice course for road water installations and crisis management in the event Neighbourhood Watch. safety. of water or fire damage. 22. Länsförsäkringar Göinge-Kristianstad 17. Länsförsäkringar Jönköping 8. Länsförsäkringar Uppsala •• Participates in fire safety projects. •• SANT project on mapping flooding around the River •• Inspects homes and homes on farms to detect risks of •• Participates in safety patrols to create a safe Svartån. fire and water damage. atmosphere for young people who are out late. •• Offers customers free inspections to prevent water •• Participates in Sweden’s largest fire drill. damage. •• Involved in projects on installing water leak detection 23. Länsförsäkringar Skåne •• Participates in Safer Town together with the emergency systems for customers in certain areas. •• Offers property owners in Sofielund, Malmö the option services and police to provide training in measures to •• Electrical inspections at farms. of “security certification” for their properties, which prevent fire and burglary in the countryside. makes everyday life more secure for residents. •• Offers recycling insurance to agricultural customers 18. Länsförsäkringar Halland together with Keep Sweden Tidy where environmen- •• Distributes fire extinguishers to new household insur- tally harmful waste is collected from farms. ance customers. •• Provides tips on how to make climate adjustments •• Provides first aid courses for children and pensioners. to a house.

14 Sustainability Länsförsäkringar Alliance 2017 Climate impact and natural catastrophes many respects, adjustment problems asso- Länsförsäkringar’s Research Fund for many Global warming is a financial risk for the ciated with managing financial risk and years. The aim of research is to contribute insurance operations and the long-term reducing the consequences of climate to greater financial and physical security in consequences are difficult to predict. change present a brand new situation. Using society. The results are made available to the A warmer climate, resulting in a greater risk historic data and correlations risks leading public and are increasingly used in the oper- of natural catastrophes in the form of to systematically underestimating risks with ations in customer activities. Five focus extreme weather conditions such as hurri- this rising trend. areas are prioritised: Tomorrow’s society, canes, torrential rain and drought, will entail road safety, climate change, mutual busi- a risk of higher payouts for weather-related Länsförsäkringar’s Research Fund ness models and secure homes. insurance claims, with considerable varia- Länsförsäkringar has supported scientific tions over years and parts of the country. In research into security for people through

Research field Project Schedule

Tomorrow’s society: Digitisation, urbanisation, The geography of trust: Trust in local society in a changing Sweden. Ersta Sköndal University Start 2017 sharing economy College. Final report 2019 Regional growth against all odds: Driving forces for long-term growth in Nordic regions. Start 2017 Lund University. Final report 2021 Regional economic development and transformation in Sweden: Then, now and tomorrow. Start 2018 Lund University. Final report 2020

Road safety Wheel-bound, unprotected road-users. Swedish National Road and Transport Research Institute Start 2015 (VTI) Linköping. Final report 2017

Climate changes Flooding risks along the Swedish coast. Swedish Meteorological and Hydrological Institute Start 2013 (SMHI) Norrköping. Final report 2017 Lower climate risk in the buildings and homes of the future – lessons from past events and Start 2015 urban planning. Karlstad University. Final report 2018 Short and long-term consequences of home-owners’ risk awareness, willingness to pay and Start 2015 risk behaviour for the insurance industry. Mid Sweden University. Final report 2017

Mutual business models Mutuality in the Swedish insurance model. Uppsala University. Start 2016 Final report 2018

Secure homes Nudging my future self: Behavioural economics studies of the financial decisions of young people. Start 2016 Linköping University. Final report 2018

Responsible insurance offering

Länsförsäkringar offers a wide range of insurance that provides in Sweden. Average water damage to a home generates about 300 kg in carbon emissions. security for various needs. Länsförsäkringar can contribute Water-damage claims can be avoided by to a sustainable society through its claims-prevention activities choosing the right materials and methods and and responsible damage repairs. by installing water alarms and leak detectors. Länsförsäkringar continuously informs its Claims prevention is environmental work rising trend of more extreme weather situa- customers and contractors about how they Preventing a claim is always a win for the tions and urban planning with new develop- can reduce the risks of water damage. environment and customers. Claims-pre- ments in vulnerable areas. Dialogue on cli- vention activities help reduce impact on the mate change and development planning is Initiatives to prevent fire-damage claims environment through less waste, energy, conducted with decision-makers in society. Fire is the single largest claim incident, new materials, transportation and other Länsförsäkringar informs its customers how encompassing everything from total dam- resources – for both the claim incident itself they can protect themselves from natural age in large commercial buildings to initially and also for restoration and repairs. Natural catastrophes, such as hurricanes, thunder- smaller incidents that still cause serious catastrophe, water and fire damage claims, storms, heat waves, drought and heavy snow fires in the home. The kitchen is where most and motor insurance claims have the great- fall, and reduce the risk of starting a forest fires start, almost half of them at the hob. est impact on the environment and are thus fire. Research into climate change is carried A fire at a home emits an average of 25 Länsförsäkringar’s focus areas for out via Länsförsäkringar’s research fund. tonnes of carbon dioxide. Fires also result claims-prevention activities. in other chemical emissions to air, land and Initiatives to prevent water damage water. Sanitising and restoring a house after Initiatives to prevent natural catastrophes Water-damage claims are the most common a fire requires a vast amount of energy as There are many reasons for higher claims claims type in our homes. More than 100,000 well as new or recycled resources, and costs caused by natural catastrophes: the cases of water damage are reported every year results in huge volumes of waste. Läns-

Länsförsäkringar Alliance 2017 Sustainability 15 försäkringar continuously informs its cus- Partnership with recycling companies offers advice and information via digital tomers about how they can reduce the risks Several regional insurance companies have a channels, such as the Agria app, a podcast of fire damage. partnership with Godsinlösen, a company that provides advice and tips for animal specialised in the re-use and recycling of owners, and the Firstvet service where cus- Initiatives to reduce road-traffic accidents damaged goods, and local partnerships are tomers can use a video link free of charge to Länsförsäkringar is the leader in motor also in place with other recycling companies. consult a veterinarian if their animal is ill or insurance and strives to reduce the number Via Godsinlösen, the regional insurance has been injured. of accidents on the road. One of the results companies reduced their carbon emissions Agria’s research fund supports research of these efforts is a joint work method and in 2017 by 243 tonnes and their volumes of on animal health and well-being and the “Claims on a Map” statistics database. Every electronic waste (mobile telephones, com- importance of animals to people and society. motor and motor third-party liability acci- puters and tablets) and bicycles by 852 Agria has extensive claims statistics that are dent and incident is reported geographically tonnes. Data is available only for these prod- used by researchers and breed clubs to and the complete incident and accident sta- uct categories. improve animal health and sustainability. tistics provide knowledge of where acci- Several of the regional insurance compa- dents occur and why, and aid efforts to pre- nies offer recycling services in cooperation Uncertain insurance cases vent long-term insurance claims in with the Keep Sweden Tidy Foundation Länsförsäkringar’s aim is to ensure that its collaboration with municipal street depart- and local entrepreneurs to reduce scrap policyholders are treated correctly and that ments and municipalities. Customers can and environmentally harmful waste in the the right compensation is paid to the right plot claims via the online claims notification Swedish countryside. In 2017, 469 tonnes person. Each regional insurance company service, which led to the number of claims in (399) of hazardous waste and 3,388 tonnes has a complaints officer whom customers the database increasing during the year. (3,027) of scrap from the agricultural sector can contact if they are unhappy with a deci- Länsförsäkringar also carries out pre- was collected. sion or their claim. ventive initiatives on four-wheel drive vehicles and children, and bicycle accidents. Health for a sustainable life Insurance fraud Länsförsäkringar’s Research Fund finances Länsförsäkringar is one of Sweden’s leading It is important to counteract insurance research into road safety. companies in health care, accident and fraud to protect policyholders and to keep health insurance, and actively participates in premiums down. Sustainability of claims repairs public debate on good health and a sustain- According to Insurance Sweden, insur- Länsförsäkringar AB has produced a certifi- able working life. Health care insurance is ance fraud accounts for between 5% and cation programme for car workshops in col- based on preventive health services and 10% of claims costs, meaning that insurance laboration with Autoteknik. Most regional providing the right type of care at the right fraud costs the entire insurance industry insurance companies have joined this pro- time with effective rehabilitation. Indepen- between SEK 3 and 6 billion every year. gramme, which ensures that the workshops dent medical examinations are used to Länsförsäkringar’s investigation organi- used for damage repairs meet environmen- ensure that mediated health care is based on sation looks into cases of suspected fraud tal and quality requirements. Workshops are medical grounds and provides the best long- and conducts preventive measures related to use used car parts for repairs as far as term results for customers. The aim is for to crime trends by arranging training possible and try to repair plastic details health care providers to follow the same courses and carrying out targeted activities. instead of replacing them, thus reducing the guidelines for the forms of treatment that One of Länsförsäkringar’s focus areas in impact on the environment. The regional are recommended for various complaints, 2017 was travel claims. The investigation insurance companies check the quality of thus meaning that health care and rehabili- organisation stopped erroneous payments completed repairs. About 1,300 workshop tation have better results for customers. of between SEK 170 and 180 M from about checks were carried out in 2017. The Swedish The aim of these preventive health services 2,700 claims cases. Fraud is an area that is Motor Insurers’ survey of 30 June 2017 is to promote good health and prevent spreading quickly throughout society. revealed that certified workshops had 35% illness by, for example, reducing stress, Länsförsäkringar works together with fewer shortfalls than non-certified work- improving sleep and maintaining a healthier the insurance industry and the authorities shops. The regional insurance companies lifestyle. Rehabilitation includes medical via Insurance Sweden to combat fraud and will continue to perform quality inspections and work-oriented rehabilitation, as well enhance security for customers. This work of completed repairs in 2018. as treatment for addiction and substance creates the conditions for influencing soci- The regional insurance companies abuse. ety’s attitudes towards fraud and helping impose high quality demands on repairs to gain an overview of the extent of the prob- properties and homes. Methods and sys- Health promotion and claims-prevention lem. Länsförsäkringar participated in indus- tems for setting requirements for compa- activities for animals try-wide activities on car fires in 2017. Läns- nies that repair damage to buildings were Agria is the market leader in pet insurance in försäkringar follows Insurance Sweden’s further developed with Länsförsäkringar AB. Sweden, conducts claims-prevention and guidelines on insurance fraud. Companies are also engaged in dialogue health-promotion activities for animals and regarding construction methods, recycling actively supports research into animal and materials that reduce adverse environ- health. Customer are involved in matters mental impacts. related to pets and veterinary care. Agria

16 Sustainability Länsförsäkringar Alliance 2017 Responsible pension and savings offering

Customers’ savings are invested in both Länsförsäkringar’s own dialogue and to pursue industry-wide issues. Partnerships include the United Nations- and external funds. The basic view is that well-managed, sustainable supported Principles for Responsible companies are a better investment in the long term. Active corpo- Investment (PRI). rate governance, international conventions, manager selection procedures and partnerships form the basis of responsible investments. Requirements on external managers Länsförsäkringar Fondförvaltning’s Swedish Länsförsäkringar strives to transparently disclose its methods and equity funds are managed by internal man- procedures for responsible investments. agers. Länsförsäkringar AB’s other investments are managed by external managers Active corporate governance Ethical basis in international conventions through funds or discretionary mandates. Corporate governance includes company Work related to responsible investments is The investment philosophy is based on using dialogues on sustainability issues, active based on the international conventions leading managers in Sweden and abroad participation in the nomination committees signed by Sweden in the areas of environ- with a variety of investment areas and man- of portfolio companies to influence board ment, human rights, labour laws, corruption agement approaches. Sustainability require- compositions and voting at general meet- and controversial weapons (nuclear weap- ments are included in the procurement of ings. A long-term objective is to increase ons, cluster munitions, biological and chemi- new managers. The integration of sustain- diversity in terms of gender, age and back- cal weapons, and landmines). An external ability issues into management models is ground, on the boards of the portfolio com- ethics consultant has been engaged to anal- monitored every year. panies. During the annual general meeting yse listed company holdings based on these season of 2017, the percentage of women conventions. Based on these analyses, Läns- Climate risks in investments board members increased to 43% (41) in the försäkringar AB strives to engage in dialogue Länsförsäkringar AB sees financial risks in companies in which Länsförsäkringar Fond- with companies that breach these conven- investing in companies that base their oper- förvaltning served on the nomination com- tions. The aim is that the analysed company ations on fossil fuels since fossil assets risk mittee. As a preventive measure, Läns- will stop its breaches and take measures to becoming “stranded assets.” In 2016, Läns- försäkringar AB engages in dialogue with prevent similar incidents from being försäkringar AB divested from its own funds companies on sustainability issues. Two repeated. If the dialogue does not achieve and direct investments about 80 mining focus areas for 2017 were water risks in the desired results, the holdings in the com- companies and energy companies that companies in emerging markets and work pany may, as a last resort, be divested. derive more than 50% of their sales from conditions in the agricultural chain of the coal. The sales level was lowered to 20% in food industry. Partnerships with other investors 2017 and led to a further 50 coal companies Länsförsäkringar AB has partnerships with being divested. other investors to give greater impetus to

Länsförsäkringar Alliance 2017 Sustainability 17 Responsible banking offering

Länsförsäkringar Bank is an important part of the financial system and by pursuing responsible loan origination can increase customer value and financial stability. Länsförsäkringar Bank’s loans are granted in Sweden and in SEK.

Loan orientation at low sustainability risk Anti-money laundering and The geographic spread of lending to both terror financing retail and corporate customers is well-di- Länsförsäkringar AB makes extensive versified, with low average lending per cus- efforts to minimise the risk of the operations tomer. The bank has very limited lending to being used for or exposed to financial crime. the large-corporates sector in which envi- Transactions are monitored actively to ronmental and social risks are typically sig- detect, for example, money laundering and nificantly greater. Accordingly, the business terror financing. Other attempts at fraud, model for loan origination has relatively low for example, card fraud, are monitored, and credit risks. a shared system for deviation reporting is in Strict requirements are imposed on cus- place at the Länsförsäkringar Alliance. tomers’ repayment capacity and the quality of collateral. Credit scoring, combined with the local customer and market knowledge of the advisors, provides favourable conditions for a loan portfolio with high credit quality and low sustainability risks.

Employees

Länsförsäkringar is not one company but a federation of 23 indepen- försäkringar Alliance. Employees can change job by working on a temporary dent and customer-owned regional insurance companies throughout assignment basis, while retaining their main Sweden, that jointly own Länsförsäkringar AB. Employees are Läns- position, or by changing to a completely new försäkringar’s most important resource. They posses a variety of role. Employees can credit their entire specialist and professional expertise that is vital to carrying out and length of service even when they change company within the Alliance. developing the operations. Skills-development opportunities are available in the regional insurance compa- Local and joint Good development opportunities nies and through joint training activities at Attracting, recruiting and retaining employ- The Länsförsäkringar Alliance has a broad Länsförsäkringar AB, which offers an exten- ees, termination of employment and bene- range of professional expertise in banking, sive portfolio of courses in life assurance, fits are issues that are mainly managed indi- insurance and real-estate brokerage ser- banking and non-life insurance and also vidually by each company in the vices, and specialist roles in a number of dif- leadership. These courses focus on giving Länsförsäkringar Alliance. Development and ferent areas. 23 independent regional insur- employees the skills needed in a business coordination in certain issues take place ance companies and a jointly owned service context to offer customers products and jointly between the regional insurance com- and development company, Länsförsäk- solutions that meet their requirements. panies and Länsförsäkringar AB. A shared ringar AB, offer a large internal labour mar- A total of 12,099 in-house training courses ambition is to advance Länsförsäkringar’s ket, which provides employees with many (8,572) for the employees of the Länsförsäk- positions as an attractive employer. opportunities for further development by ringar Alliance were held in 2017. Employees changing job, either in the local regional also received training through skills transfer, insurance company or within the Läns- external courses and seminars.

18 Sustainability Länsförsäkringar Alliance 2017 Manager training is also offered through Promoting equality and diversity is a natural One of Sweden’s most attractive the partner European Alliance Partners element of the corporate culture. employers Company. Senior-level managers and spe- Länsförsäkringar is one of the Sweden’s Young university graduates named Läns- cialists are nominated for these training leading companies in health care insurance försäkringar the best employer in insurance programmes every year. and takes out such insurance for its employ- for the tenth consecutive year, resulting in ees. This insurance includes medical consul- a 53rd place in the top 100 best employers, Work environment and health tations, personal counselling and preventive in the Career Barometer survey. In the Länsförsäkringar is a highly positive work health services encompassing a health pro- Corporate Barometer, business students environment and collaboration and cooper- file and online health programmes. The at Swedish universities and colleges ranked ation are key words for creating strong insurance also includes work-oriented reha- Länsförsäkringar as their dream employer solidarity and companionship. An open and bilitation. Länsförsäkringar’s aim is that its in the insurance industry for the 15th year. tolerant working climate free from all forms employees will enjoy a good work-life bal- Länsförsäkringar came 26th of the top of discrimination is the very foundation of ance at all times. 50 large employers (with more than 600 relationships between colleagues and with employees) in the Sweden’s Best Employer customers. survey. The survey is internal and based on employee responses to the Career Barometer.

Limited direct environmental impact The direct environmental impact of the operations is relatively limited and primarily comprises business travel, heating and electricity in office premises, and paper print- outs. The main strategies for reducing the climate impact of Länsförsäkring- ar’s own operations are energy efficiency, a move to renewable energy, reducing travel and increasing the use of digital technology. Climate compensation is applied for the carbon emissions generated by the business.

Governance and direction Core values, requirements and expertise are essential in order for Länsförsäkringar to achieve its goal of a higher level of sustainability in its operations. Governance in guidelines and policies, and targets, supports this work. Improvements are continuously made to work methods and procedures to enhance sustainability. Länsförsäkringar AB also signed the UN Global Compact’s ten principles, the UN Principles for Responsi- ble Investment (PRI) and the UN Principles for Sustainable Insurance (PSI). Länsförsäkringar is a member of several trade organisations and participates in numerous sustainability partnerships with other actors.

Länsförsäkringar Alliance 2017 Sustainability 19 Stable market-leading position

Non-life insurance Strong earnings, healthy volume growth and once again the most satisfied retail customers according to the Swedish Quality Index were the highlights of 2017. Premiums earned increased to SEK 25.5 billion, the combined ratio improved to 92% and the market-leading position was stable with a market share of 31%.

Premiums earned: SEK 25,504 M Most of Länsförsäkringar’s non-life insur- have instead fallen by about 4%. The num- ance business is underwritten by the ber of insured households and single-family regional insurance companies. Some non- homes increased slightly year-on-year, life insurance business lines, including pet whereas the number of vacation homes and health insurance, is underwritten by the remained relatively unchanged. The number jointly owned Länsförsäkringar AB’s subsid- of passenger-car insurance policies is con- iary. Of the Länsförsäkringar Alliance’s total tinuing to increase since sales of new cars Operating profit: SEK 7,078 M premiums earned in non-life insurance of in 2017 were at an all-time high. SEK 25.5 billion, SEK 19.9 billion is under- Distribution via digital channels is con- written in the 23 regional insurance compa- tinuing to accelerate. Manual and work- nies and the remainder in the Länsförsäk- intense processes are being simplified, ringar AB Group. made more efficient and automated through robotics and more intelligent deci- The non-life insurance market sion-making support. Risks can be more Premium income for the non-life insurance accurately priced by using the supply of Combined ratio market in Sweden is growing steadily and information and analysis, which results in paid-in premiums reached SEK 80 billion in an individual offering that is harmonised 2017. Premium income has risen SEK 22 bil- and tailored to customer needs. At the lion over the past 10 years, up 38%. This same time, digitisation brings higher risks increase is high but unevenly distributed of cyber attacks that are increasing in between insurance lines. Premium income frequency and sophistication. for accident and health insurance has dou- The passenger-car market is in a state bled over ten years, while commercial lines of major change. The number of new car

Market shares

Non-life insurance Commercial lines Percentage of premiums paid Percentage of premiums paid

Source: Insurance Sweden Source: Insurance Sweden

Länsförsäkringar 30.8% Dina Federation 2.7% Länsförsäkringar 44.8% Dina Federation 3.5% If 18.5% Captive companies 2.3% Captive companies 11.1% Gjensidige 2.7% Folksam 15.7% Other 12.2% If 9.6% Folksam 2.2% Trygg-Hansa 14.6% Trygg-Hansa 9.4% Other 12.0% Moderna 3.2% Moderna 4.7%

Länsförsäkringar strengthened its position as a leader Länsförsäkringar strengthened its strong position in in the non-life insurance market, with a market share commercial lines, with a market share of 44.8%. of 30.8%.

20 Non-life insurance Länsförsäkringar Alliance 2017 Non-life insurance

registrations has broken new records, while customer. This provides opportunities in the The motor insurance business is continuing the share of privately hired vehicles bucked form of modernised claims-prevention ser- to capture market shares. Motor third-party the trend in 2017 and declined slightly. The vices linked to water and fire damage as liability increased to 39.5% (38.7) and in new car market is expected to remain well as burglary that can enhance the cus- motor insurance to 27.3% (26.8), measured strong over the next few years but advances tomers’ perceived sense of security. Tech- in premium income. towards active safety and automated vehi- nological advances can also present new cles will reduce the claims frequency and work methods in risk assessment and Brokered business claims costs. Many changes to insurance claims adjustment that result in a lower Länsförsäkringar Mäklarservice is Läns- needs and legislation can be expected, claims frequency and claims costs. försäkringar’s link to customers who probably involving a shift from personal lia- choose to be represented by insurance bro- bility to producer liability. At the same time, Market position kers. The Länsförsäkringar Alliance’s bro- there is a continued trend towards electric Länsförsäkringar strengthened its position kered non-life insurance premiums rose and fossil-free vehicles. Many indicators as market leader in a growing non-life 14% to SEK 2,044 M (1,787). The brokered suggest that electric vehicles will dominate insurance market, commanding a share of non-life insurance business accounted for the vehicle-market in the future, but such a 30.8% (30.2), measured in premium income. 31% of the Alliance’s total non-life insurance transition takes time and the financial Länsförsäkringar is a market leader in com- portfolio for commercial insurance. The aspects weigh heavily on consumers. A mercial, homeowner, motor and pet insur- strategy of clearly prioritising larger bro- slow-down factor is that electric cars are ance lines. kerage companies, to increase the effect now significantly more expensive than their Länsförsäkringar’s market share of com- on medium-sized companies, has proven to fossil-fuelled counterparts. Subsidies, taxa- mercial lines strengthened to 44.8% (41.0), be successful. In addition to sales efforts, tion and other political decisions, such as measured in premium income. Länsförsäkringar continued to develop banning new sales of fossil-fuelled cars, The market share for homeowner insur- automated services in brokered non-life could however speed up the transition in ance, 39.9%, and household insurance, insurance business, to aid insurance bro- the wait for the price of electric cars to fall. 26.0%, measured in the number of insurance kers’ daily contact with Länsförsäkringar. New technology is driving the develop- policies were essentially unchanged com- The Länsförsäkringar Alliance’s brokered ment of intelligent homes and properties. pared with competitors, despite an increase group and health businesses amounted to By using functions in intelligent homes, new in the total number of insured objects. Läns- SEK 257 M (255). Länsförsäkringar’s growth solutions can be found in claims-prevention försäkringar’s portfolio increased by 9,000 during the year was generated by new busi- activities that are more automated and sus- homeowner insurance policies and 27,000 ness in existing group life assurance. tainable and that take a holistic view for the household policies in 2017.

Market shares

Homeowner insurance Passenger-car insurance Household insurance Percentage of no. of policies Percentage of no. of policies Percentage of no. of policies

Source: Insurance Sweden Source: Insurance Sweden Source: Insurance Sweden

Länsförsäkringar 39.9% Gjensidige 2.5% Länsförsäkringar 35.0% Moderna 3.2% Länsförsäkringar 26.0% Gjensidige 1.5% Folksam 27.8% Moderna 2.1% If 23.9% Gjensidige 3.1% Folksam 47.0% Dina Federation 1.4% If 12.6% Other 0.4% Folksam 18.9% Protector, 1.1% If 11.2% Other 1.0% Trygg-Hansa 9.9% Trygg-Hansa 10.4% Other 1.1% Trygg-Hansa 9.9% Dina Federation 4.8% Dina Federation 3.3% Moderna 2.0%

Länsförsäkringar remained a market leader in home The market share of passenger-car insurance amounted The market share for household insurance amounted to owner insurance, with a market share of 39.9%. to 35.0%. Both Länsförsäkringar’s premium portfolio and 26.0%. The number of household insurance policies rose the number of policies increased. during the year.

Länsförsäkringar Alliance 2017 Non-life insurance 21 Non-life insurance

Motor Home Yacht Länsförsäkringar offers vehicle insurance in Länsförsäkringar offers home insurance for Länsförsäkringar offers yacht insurance. the retail, corporate and agriculture seg- single-family homes, apartments and vaca- The market share in 2017 amounted to ments. Growth remained strong in 2017. tion homes. The total home-insurance mar- 32.5% (32.4), measured in the number of Länsförsäkringar’s premium income for ket grew SEK 166 M in 2017, corresponding insurance policies. motor third-party liability and motor insur- to 1.0% measured in premium income. ance rose 5%, compared with market During the same period, Länsförsäkringar Market position growth of slightly more than 3%. Läns- increased its premium income in home Länsförsäkringar retained its leading mar- försäkringar thus increased its market insurance by SEK 312 M or 6.7%. ket position in 2017. The closest competitor share to 30.8% (30.3), measured in premium Moderna Försäkringar/Atlantica has a mar- income. Market position ket share of 18.7%, measured in the number Länsförsäkringar remains a market leader in of insurance policies. Market position home insurance, with a market share of Länsförsäkringar’s premium income for 30.9% (29.3), measured in premium income. Development motor insurance increased almost 7%, in a Länsförsäkringar also remains a market Theft of primarily newer types of outboard market than grew 5%. The market share leader in homeowner insurance, with a mar- engines continued to increase during the measured in premium income thus ket share of 39.9%, measured in the number year, although the number of registered strengthened to 27.3% (26.8). In motor of insurance policies. Länsförsäkringar is claims fell slightly. The unstable summer third-party liability insurance, Länsförsäk- also a market leader in vacation-home weather and lack of major storms in the ringar’s market share increased to 39.5% insurance, holding a market share of 40.9%, autumn were probably the reasons for the (38.7), measured in premium income. with measured in the number of insurance poli- slightly lower claims figure in 2017 than growth of just under 2% in a market that cies. In the separate household insurance in 2016. essentially stood still. In the largest prod- segment, Länsförsäkringar has a market uct – passenger-car insurance – Läns- share of 26.0%, measured in the number of försäkringar’s portfolio grew by 46,000 insurance policies. vehicles during the year. As a result, Läns- försäkringar retained its leading position in Development the market and insures more than one-third Competition in the home-insurance seg- of cars in Sweden. ment varies across Sweden and is generally unchanged, at the same time as market Development shares remain stable. The continued trend To ensure long-term robust competitive- in home insurance is attractive package ness in motor insurance, one of the focus offerings with broad coverage, and what areas in 2017 was developing the motor-in- was previously supplementary insurance is surance offering to our customers. Product now being included in the basic package. All content was strengthened and digital ser- insurance companies are working to offer vices for motor-insurance customers were good digital solutions. improved. Digital services were expanded, for example with claims reporting in Läns- försäkringar’s app, and more options for customers to change their insurance directly online. Improving pricing models for motor-insurance products was also a high priority for the retail and corporate Home 2017 2016 segments. Premiums earned, gross, SEK M 4,595 4,310 Household, no. of policies 841,000 814,000 Market share, no. of Motor 2017 2016 households, % 26.0 26.0 Premiums earned, gross, SEK M 8,757 8,358 Homeowner + home content, Passenger cars, no. of policies 1,718,000 1,672,000 no. of policies 696,000 687,000 Market share, no. of passenger Market share, no. of Yacht 2017 2016 cars, % 35.0 36.1 homeowner + home content, % 39.9 40.1 Premiums earned, gross, SEK M 149 147 Other vehicles, no. of policies 1,422,000 1,387,000 Vacation homes, no. of policies 236,000 235,000 Yachts, no. of policies 90,000 86,000 Market share, no. of other Market share, no. of vacation vehicles, % 48.0 49.5 homes, % 40.9 40.9 Market share, no. of yachts, % 32.5 32.4

22 Non-life insurance Länsförsäkringar Alliance 2017 Non-life insurance

Commercial Agriculture Agria Djurförsäkring Länsförsäkringar offers insurance for all Länsförsäkringar offers insurance for resi- Länsförsäkringar offers pet and crop insur- industries, from small to large companies. dential farming, part-time agricultural ance through Agria. Premiums earned Premium income for commercial lines operations and production agriculture. amounted to SEK 3,140 M (2,895). amounted to SEK 5,991 M (5,691) in 2017. Market position Market position Market position In 2017, premium income for agricultural Agria is the benchmark and market leader Länsförsäkringar’s market share measured insurance increased 4%. Länsförsäkringar in pet insurance in both Sweden and Nor- in premium income rose to 44.8% (41.0), and remains the leader in providing insurance way. The Swedish operations continued to Länsförsäkringar thus retained its leading cover for agricultural customers. deliver stable growth, mainly in cat, pet and position. The higher market share was horse insurance. Agria launched new dog largely due to If and Trygg-Hansa changing Development insurance policies customised for 423 dif- their reporting during the year and report- The segmentation among agricultural cus- ferent breeds on 1 April. Focus on cat insur- ing liability insurance under other non-life tomers has improved opportunities to give ance is continuing and a new collective vet- insurance business. Even after adjusting for customers tailored insurance cover and to erinary-care insurance for cat shelters was this, Länsförsäkringar’s market share was risk adjust premiums in the various insur- launched at year-end. The operations in stable at 41%, measured in premium ance solutions. Jointly handling the main Norway continued to display a stable trend income. operations in “green businesses” has led to with higher business volumes. More compa- standardisation and efficiency enhance- nies consider pet insurance to be an attrac- Development ments. The option of supplementing cus- tive niche in the insurance industry and the A new commercial insurance policy “start tomer cover in the agricultural area with offering in the Norwegian market is increas- your own company insurance” was launched commercial solutions on the same insur- ing. The Danish operations also posted a during the year, customised to new small ance policy means that Länsförsäkringar is stable, positive volume growth. Horse insur- businesses. The insurance is a set package well-equipped for the continued rapid ance was launched in Denmark with strong, and offers broad insurance cover. Many development in agriculture towards larger initial sales. Profitability improved in the UK companies are continuing to offer commer- and more complex, diversified companies. and awareness of the Agria brand improved cial insurance which leads to general price during the year and the portfolio grew sig- pressure, while portfolio procurements nificantly. We are closely following develop- from larger insurance brokers are more and ments after the UK referendum to leave the more common. For small companies, the EU and are making preparations for the trend is shifting towards industry-specific changes that may be needed in connection insurance and digital distribution. with Brexit. Establishment of operations Competition remains fierce in cargo commenced in France during the year. insurance, particularly in the large company segment, and premium volumes were rela- Development tively unchanged during the year. In liability Agria conducts claims-prevention and insurance, the trend of an increasing num- health-promotion activities for animals and ber of players showing interest in the small offers advice and information to animal and medium-sized businesses segment is owners via various digital channels, such as continuing, thus intensifying competition. the Agria app, the Pälspodden podcast, and Through the International Network of the Firstvet service. Agria’s Research Fund Insurance (INI), Länsförsäkringar is one of supports research on animal health and the few companies in the Swedish market well-being and the importance of animals to that can offer customised and local insur- people and society. Agria’s extensive claims ance solutions in more than 100 countries statistics are used by researchers and at competitive prices. breed clubs to improve animal health and sustainability.

Agriculture 2017 2016 Commercial 2017 2016 Premiums earned, gross, SEK M 1,734 1,665 Premiums earned, gross, SEK M 4,398 4,136 Agricultural insurance, no. of No. of policies 234,000 230,000 policies 190,000 189,900 Agria Djurförsäkring 2017 2016 Market share, premium income Tractor insurance, no. of commercial lines, % 44.8 41.0 policies 283,000 283,000 Premiums earned, gross, SEK M 3,140 2,895

Länsförsäkringar Alliance 2017 Non-life insurance 23 Non-life insurance

Health Children’s insurance Reinsurance Länsförsäkringar offers health care, acci- Länsförsäkringar offers pregnancy and chil- Länsförsäkringar Sak manages the Läns- dent and health insurance. Premiums dren’s insurance. A new children’s insurance försäkringar Alliance’s joint reinsurance earned increased by slightly more than 7% was launched in 2015 and Länsförsäkringar cover and internal Alliance reinsurance with to SEK 1,665 M (1,551) in 2017. has since invested heavily in the insurance, a number of pool solutions. The internal which is hailed by the Swedish Consumers reinsurance and the reinsurance jointly pro- Market position Insurance Bureau as one of the best in the cured for the Länsförsäkringar Alliance is a Länsförsäkringar’s market share was stable market. Annual sales have increased by major asset for Länsförsäkringar and its at slightly more than 20%. The market for more than 30%, measured in the number of customers. The system ensures a stable personal-risk insurance was affected by insurance policies, since the new product solution at low cost by distributing risk growing concern that social insurance in was launched in 2015. within the Länsförsäkringar Alliance and Sweden will be insufficient, and greater procuring external cover for large claims. household debt. Personal-risk insurance The Länsförsäkringar Alliance’s internal provides an important supplement for reinsurance, to which Länsförsäkringar increasing financial security in the event of Sak contributes a 15% share of assumed illness, accident, unemployment and death. reinsurance, noted few large claims during Länsförsäkringar remains a market leader in the year. health care insurance and has the most Länsförsäkringar Sak also underwrites comprehensive products featuring preven- a highly diversified portfolio in internation- tive health services, the right care at the ally assumed reinsurance, both risk and right time, and effective rehabilitation. catastrophe business, specialising in property business. The long established strategy Development is to underwrite business from mutual Digital handling of insurance policies was companies with broad geographic risk developed during the year. The policies have diversification. a digital health declaration, which improves the efficiency of handling times and provides better and faster service. Digital services for the Bo Kvar insurance, which provides cover in the event of death, illness or unemployment, were also developed during the year. This insurance policy is now offered to customers that have their household insurance with Länsförsäkringar, in addition to customers with mortgages with Länsförsäkringar Bank. The government is preparing a fringe- benefit tax for health care insurance paid by the employer, which could come into effect on 1 July 2018. Länsförsäkringar believes that health care insurance supports employers’ health and safety activities and serves as a health-promoting and rehabilitating measure and should therefore be taxed like similar measures.

Health 2017 2016 Children’s insurance 2017 2016 Premiums earned, gross, SEK M 1,665 1,551 Premiums earned, gross, SEK M 538 494 Market share, accident and health insurance, premiums paid, % 20.5 20.0 No. of insured parties 300,000 290,000

24 Non-life insurance Länsförsäkringar Alliance 2017 Non-life insurance

Claims adjustment Each individual regional insurance company Natural catastrophes Follow-up tests of sealing layers were car- offers a comprehensive range of non-life It was a second consecutive year of rela- ried out in 2017 and it was concluded that insurance products to its private, agricul- tively minor natural catastrophes. Total there are still shortcomings in various tural and commercial customers. Claims expenses amounted to SEK 135 M, com- choices of method and materials, but it is processing takes place locally, close to cus- pared with SEK 155 M for 2016 and an aver- positive that the number of sub-standard tomers. The combination of local presence age cost of about SEK 540 M per year for sealing layer solutions has fallen. and the ability to tie together these resour- 2013-2015. During the year, Länsförsäkringar ces with shared expertise results in high- The summer, which many holidaymakers focused intensely on unprotected road-us- quality customer service for all types of perhaps though was “bad” was on the con- ers, for example, by performing crash tests claim incidents. A total of 900 people in the trary quiet and “good” from a claims point of different bicycle models and testing Länsförsäkringar Alliance work in the area of view. Without the most intense bicycle helmets. Important research find- of claims adjustment and an international high-summer heat, there are fewer ings were published and gained widespread network of partners also provides service instances of torrential rain and less thunder media attention. outside Sweden. storms. However, several areas around Claims adjustment entails the delivery of Gothenburg and Bohuslän province did suf- Major claims the product purchased by the customer and fer from two major cases of flooding due to Major claims require special resources. should be quick, secure, be carried out in a torrential rains in June and September. Länsförsäkringar has prepared a contin- highly skilled manner and provide the cor- The issue of natural catastrophes has gency plan for managing large claims, and rect compensation. Rapid digital develop- matured despite fewer natural disasters in the regional insurance companies also con- ments combined with fierce competition 2017. Länsförsäkringar is active in public tinuously monitor the risks in their local continuously set high demands on claims debate and, as an expert in the field, can areas. The primary purpose of the contin- adjustment, which requires that work meth- describe risks based on monetary terms to gency plan is to establish a state of pre- ods, terms and conditions, and service help boost understanding. paredness within the individual regional options in digital channels are developed insurance companies, and also to coordi- and refined to meet customers expecta- Claims prevention nate available resources. Consequently, the tions when a claim arises. Claims prevention is a key element of the regional insurance companies are well- regional insurance companies’ sustainability equipped and prepared for any major claim efforts and avoiding claims is always a ben- that may occur. efit for the environment.

Service outside Sweden Customer needs are also met outside Sweden and the claims-adjustment service has been expanded to provide rapid assistance abroad, for both individual claims and Claims more large-scale events. For emergency claims, special resources are required. The costs, Claims Number SEK M1) Länsförsäkringar Alliance is one of the largest shareholders of SOS International, Commercial 35,400 2,491 which assists customers through both travel and vehicle insurance. Help is provided Agriculture 24,200 880 for medical assistance and transportation when customers suddenly fall seriously ill Home 293,600 2,699 or are involved in an accident while abroad, and for other types of events, such as Accident and health 58,100 369 delayed baggage. For motor insurance claims abroad, help is provided in the form of Yacht 2,753 81 breakdown services, referrals to car repair garages and transportation. SOS Interna- Private motor 370,500 2,839 tional processes slightly more than 15,000 international cases for the regional insur- Commercial motor 94,300 1,267 ance companies every year. Total 878,853 10,626 1) Compensation paid for claims that occurred in 2017.

Länsförsäkringar Alliance 2017 Non-life insurance 25 Non-life insurance

Comments on financial results, Non-life Insurance

Earnings and profitability improved to 74% (75). The expense ratio fell Private insurance increased almost 7%, with Earnings from the Länsförsäkringar Alli- to 18% (20) and the combined ratio growth continuing to be driven by house- ance’s non-life insurance operations consist improved to 92% (95). hold, homeowner and accident insurance. of the total earnings of the 23 regional insur- Solvency capital increased SEK 8,193 M Agria reported robust growth, particularly ance companies and the Länsförsäkringar in 2017, amounting to SEK 66,149 M on in its international operations. The commer- AB Group, excluding Länsförsäkringar Fond 31 December 2017. The solvency margin cial segment increased strongly by more liv and the Länsförsäkringar Bank Group. amounted to 253% (236). than 6%, primarily driven by healthy growth Operating profit for the Länsförsäk- in commercial property and commercial ringar Alliance’s non-life insurance opera- Business volumes insurance. Premiums earned in the total tions increased to SEK 7,078 M (4,626), after Länsförsäkringar continued to strengthen motor insurance segment rose 5%, driven bonuses and discounts to customers of SEK its leading position in the Swedish non-life by both portfolio and premium increases. 1,798 M (1,202). insurance market with a market share of Länsförsäkringar’s growth in the total motor Investment income increased to SEK 30.8%, according to statistics from Insur- insurance segment remained stronger than 6,969 M (5,009) and the technical result ance Sweden for 2017. market growth, which according to Insur- improved to SEK 2,529 M (1,813) due to solid Premiums earned increased 6% to SEK ance Sweden was slightly more than 3% in premium growth and a moderate increase 25,504 M (24,073). Both portfolio and pre- 2017. Premiums earned in the agriculture in claims payments. The claims ratio mium increases contributed to the increase. segment increased slightly more than 4%.

Non-life insurance 2017 2016 2015 2014 2013 Premiums earned after ceded reinsurance, SEK M 25,504 24,073 22,705 21,550 20,067 Technical result before bonuses, SEK M 2,529 1,813 2,700 2,266 1,247 Operating profit, SEK M 7,078 4,626 4,365 5,209 3,863 Expense ratio 18 20 19 19 19 Claims ratio 74 75 72 74 79 Combined ratio 92 95 91 93 98 Technical result as a percentage of premiums earned after ceded reinsurance 10 8 12 11 6 Solvency capital, SEK M 66,149 57,956 51,628 46,493 40,458 Solvency margin, % 253 236 222 209 206 Return on equity, % 11 8 8 11 10

26 Non-life insurance Länsförsäkringar Alliance 2017 Non-life insurance

Claims trend Investment income Allocation of investment assets Claims payments after ceded reinsurance The favourable performance of the global amounted to SEK 18,571 M (17,942), up 3.5%. stock markets in the fourth quarter, partic- The claims ratio fell to 74% (75). The trend ularly in emerging markets, was reflected in from earlier quarters in 2017 persisted with the Länsförsäkringar Alliance’s investment lower claims costs for accident and water income of SEK 1,756 M for the fourth quar- damage, but higher costs for fire damage ter. This resulted in very healthy investment and motor insurance claims. income for 2017 of SEK 6,969 M (5,009). Länsförsäkringar sees a clear connec- Investment income amounted to 7% of the tion between the claims trend and the dis- asset value at the end of 2017, driven by traction of using a mobile telephone while high returns on equities investments and Equities, 41.8% Property, 8.2% driving. Claims costs for young car owners properties. Interest-bearing, 29.1% Other, 20.9% have increased markedly by 30-40% in the Total investment assets amounted to past five years. Länsförsäkringar welcome SEK 101.4 billion on 31 December 2017. the new Swedish law that came into effect on 1 February 2018 that bans drivers from holding a mobile in their hands while driving.

Solvency ratio on 31 December 2017 Operating profit % SEK M 300 8,000

250 6,000 200 4,000 150

100 2,000 50 0 0 Länsförsäkringar Sak 2013 2014 2015 2016 2017 23 regional insurance companies The improved operating profit in 2017 was mainly due to strong investment income, but also an improved technical result.

The regional insurance companies and Länsförsäkringar Sak remained very well capitalised in 2017.

Länsförsäkringar Alliance 2017 Non-life insurance 27 The bank with Sweden’s most satisfied customers

Banking Länsförsäkringar Bank is a customer-owned bank with a strong local presence. With its close customer relationships through local meetings and market-leading digital services, Länsförsäkringar Bank is the company in the bank market with the most satisfied banking and mortgage customers in both the retail and corporate sectors.

Business volume: SEK 520 billion Economic environment and market employment rate is now well above levels A sense of optimism prevailed in the eco- prior to the financial crisis of 2008. Never- nomy during 2017, with the global economy theless, the Riksbank decided to wait out growing stronger. The largest surprise was interest rate increases, and the repo rate Europe’s performance where the economy has been negative for almost three years. clearly surged and growth exceeded expec- The SEK strengthened against the USD but tations. However, inflation remained far weakened against the EUR during the year. Number of primary bank customers: short of targets, which means that the ECB Continued expansive signals from the Riks- 467,000 is expected to maintain its expansive mone- bank, a degree of concern regarding the tary policy. The US economy also trended Swedish housing market and a stronger positively, particularly the strong labour EUR underpinned this trend. Housing prices market, although inflation was lower than generally show seasonal variations with a anticipated, which led to the Fed continuing weaker performance towards the end of the its austerity measures in monetary policy at year, yet 2017 reported considerably weaker a restrained rate and increased interest figures than normal and housing prices, rates three times. The Republican tax excluding seasonal variations, fell 5.3% in Primary bank customers who are reform slightly raised expectations of US the second half of the year. also insurance customers growth in 2018, further fuelling stock mar- The Swedish Financial Supervisory ket performance. In general, the global Authority’s decision to introduce a stricter economy was surprisingly stable in 2017, repayment requirements combined with a particularly in light of the political risks that temporarily high supply of new-builds may dominated the news. The UK applied to have accelerated this development. Looking leave the EU, Germany experienced difficul- forward, the housing market has now ties in forming a government and the US become a more distinct risk for the Swedish markedly elevated its tone towards North economy, even though the underlying eco- Korea, while risks in the Middle East nomic conditions for households remain increased. Stock markets generally posted unchanged. a favourable trend for the year, led by emerging markets. Regulatory development The fixed-income market reported no Regulatory changes are expected to con- major fluctuations during the year. Long- tinue to have a major impact on banks. term US interest rates moved sideways fol- During the year, the European Commission lowing a sharp upswing towards the end of and Basel Committee continued their work 2016, while short-term rates tracked the on the ongoing overview of current capital Fed’s three rate hikes. Swedish and Euro- adequacy regulations. pean long-term interest rates ended 2017 At the end of 2016, the European Com- slightly higher than at the start of the year mission published its proposed reviews of and short-term rates fell marginally. Rates the existing capital adequacy rules concern- on Swedish covered bonds fell during the ing both the regulation and the directive. EU year and demand from investors was good. negotiations are under way and are expected The Swedish economy performed to be completed at the end of 2018. The strongly during the year; growth was sur- effective date is currently uncertain. prisingly positive, the labour market contin- In December 2017, the Basel Committee ued to improve and inflation rose. The published its regulatory reforms to com-

28 Banking Länsförsäkringar Alliance 2017 Banking

plete the applicable Basel III rules. These vices Directive (PSD2), which is another set tomers. Other target groups are agricul- reforms entail major changes and are pro- of regulations that will have a major effect tural customers and small businesses. The posed to come into effect on 1 January on banks in the future. aim is, based on sustained low risk, to main- 2022, with a phase-in period of five years. Länsförsäkringar Bank is highly prepared tain healthy growth in volumes and profit- For Sweden, these reforms must first be and well capitalised for impending changes, ability, have the most satisfied customers incorporated into EU law. even if it is slightly unclear at this stage and more customers who have both bank- In December 2017, the Swedish National what the effects will be. ing and insurance with Länsförsäkringar. Debt Office announced its decision on re- According to the 2017 Swedish Quality solution plans and minimum requirements Strategy and goals Index customer satisfaction survey, Läns- for own funds and eligible liabilities (MREL) Länsförsäkringar Bank was founded in försäkringar Bank is the single player on the for the institutions that have business activ- 1996 and is now the fifth largest retail bank bank market with the most satisfied retail ities that are deemed to be critical to the in Sweden with a business volume of SEK customers, an accolade that Länsförsäk- Swedish financial system, including Läns- 520 billion. ringar Bank has won twelve times in the försäkringar Bank. The implementation of The banking operations are conducted past fourteen years. For the first time, Läns- the new accounting rules under IFRS 9 was only in Sweden and the market position is försäkringar Bank was also named the sin- also completed during the year and will continuing to continuously strengthen. gle player with the most satisfied corporate impact the method used for provisions for The strategy is to offer banking services customers and the player with the most loan losses in 2018. to the Länsförsäkringar Alliance’s custom- satisfied mortgage and corporate custom- In addition to capital adequacy and ers and leverage Länsförsäkringar’s strong ers for property loans. This is confirmation accounting related rules, the Bank is also brand and local presence. The banking of the banking operations’ clear customer impacted by a number of other operational operations have a large potential customer focus and high quality. With a comprehen- regulations. Examples of this are MiFID II base with the Länsförsäkringar Alliance’s 3.8 sive banking and insurance offering from that has been gradually implemented into million customers. The main target groups Länsförsäkringar, both retail and corporate the operations and that comes into effect are the 3.2 million retail customers, of customers receive a secure, total solution. at the start of 2018 and the Payment Ser- whom 2.3 million are home-insurance cus-

Market facts

GDP growth Inflation Housing-price trend % % Index 2005-01 = 100 8 5 300

6 4 4 250 3 2 2 0 200 1 -2 0 -4 150 -6 -1 -8 -2 100 08 09 10 11 12 13 14 15 16 17 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 05 06 07 08 09 10 11 12 13 14 15 16 17

Sweden Germany Sweden Eurozone Housing prices Tenant-owned apartments US Eurozone US Single-family homes

The Swedish economy performed well during Inflation (CPI) in Sweden rose during the year, partly The Swedish housing market declined in 2017, due to the year. driven by temporary effects. higher supply, stricter mortgage repayment requirements and greater uncertainty regarding future trends in the housing market.

Länsförsäkringar Alliance 2017 Banking 29 Banking

Offering

Savings includes 37 mutual funds managed under Loans Länsförsäkringar focuses on giving custom- Länsförsäkringar’s own brand with various The bank’s lending is continuing to grow ers secure savings. For example, customers investment orientations and a fund plat- stably and maintains low risk. Lending are offered savings through various types of form with external funds. Work continued increased 15% to SEK 261 billion. The largest deposit accounts and also through such during the year on establishing in-house product is retail mortgages, which com- products as mutual fund savings, Invest- Swedish equity fund management. Several prises 76% of the loan portfolio. Retail ment Savings Accounts (ISK) and equities steps were taken in sustainability, for exam- mortgages are mostly granted by Läns- savings. Customer meetings strive to ple, a sustainability analysis was developed försäkringar Hypotek, which offers mort- ensure that customers have secure private for Swedish equity asset management. In gages up to 75% of the market value. Any finances in which savings and mortgage addition, publication of Morningstar’s surplus mortgage portions are offered by repayments are key elements. By making Sustainability Rating for funds was initiated Länsförsäkringar Bank. Loans to tenant- mortgage repayments, a customers’ private on Länsförsäkringar’s website and Swesif’s owners’ associations and to multi-family finances can become more balanced over sustainability declaration on Länsförsäk- housing are offered besides mortgages. time. ringar’s website was upgraded. The market share for mortgages amounted The fund volume increased 15% to SEK to 6.3%. Deposits 159 billion during the year, of which man- In 2014, Länsförsäkringar Bank was the Deposits from the public rose 9% to SEK 99 aged funds under Länsförsäkringar’s own first Swedish bank to licence all of its mort- billion and growth has been stable in recent brand amounted to SEK 139 billion. The gage loan application processors. Such years. The market share for household average return of the funds for the year was licensing exams, which are based on the deposits was 4.8% and the number of 9.8%. Länsförsäkringar’s award-winning proficiency requirements of the EU Mort- deposit accounts increased 10%. mobile app allows customers to manage gage Credit Directive, create greater secu- The Investment Savings Account (ISK) fund savings, change, purchase and sell rity for customers. displayed healthy growth during the year. funds and shares, thus consolidating the Länsförsäkringar is one of the largest bank’s strong position in digital services. providers of agricultural loans in Sweden. Fund and securities Trading in equities and other securities is The bank’s agricultural loans are primarily Sweden’s fund market continued to grow growing steadily among customers and the targeted to family-owned agricultural oper- in 2017. Länsförsäkringar Fondförvaltning number of deposits rose during the year. ations that are insurance customers with commands a market share measured in Structured products are also offered, such Länsförsäkringar. The average agricultural fund assets of 3.4%. The fund offering as equity-linked bonds. loan commitment is small and the percent-

Business volumes and net interest income Customer satisfaction bank, retail customers Bank cards and card-payment transactions Source: Swedish Quality Index SEK bn SEK M Index Cards, thousands Transactions, millions 600 6,000 80 800 200 70 500 5,000 60 600 150 400 4,000 50

300 3,000 40 400 100 30 200 2,000 20 200 50 100 1,000 10

0 0 0 0 0 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Handelsbanken Industry Nordea Mutual funds Agricultural loans Länsförsäkringar Bank SEB Swedbank Cards, thousands Transactions, millions Deposits Other loans Source: Swedish Quality Index Mortgages Net interest income, SEK M

Total business volumes have increased an average of 12% Länsförsäkringar Bank is the single player in the bank The number of bank cards and card-payment transac- over the past five years. Net interest income has risen an market with the most satisfied retail customers accord- tions has risen steadily over the past five years. average of 15%. ing to the Swedish Quality Index (SQI 2017).

30 Banking Länsförsäkringar Alliance 2017 Banking

age of first-lien mortgages is 94%. Agricul- Corporate segment Loans, product distribution tural lending grew at a lower rate than other Deposits in the corporate segment con loans during the year and its share of total tinued to grow and deposits from small loans is falling. businesses amounted to SEK 11.2 billion. Wasa Kredit offers leasing, hire pur- The largest increase was noted in deposits chase and unsecured loans. Lending rose by in trading and investment accounts. Loans 18% to SEK 22 billion during 2017. to small businesses amounted to SEK 1.8 billion. Payments and bank cards Bank cards are continuously developed to Offering to young people offer customers security and a high level of The bank’s offering to young people Mortgages, 75.7% Hire purchase, 3.6% service in their payment services. The num- directed to teenagers aged 12-17 is one of Agriculture, 10.2% Multi-family housing, ber of bank cards increased 13% to 655,000 the best in the market. The young person’s Unsecured loans, 3.2% 3.0% and the number of card-payment transac- bank card makes everyday life easy, with Leasing, 2.8% Other 1.5% tions rose 14% to 154 million. The Swish ser- purchases and cash withdrawals immedi- vice, which allows private individuals to ately debited from the young person’s The loan portfolio primarily comprises retail mortgages, send payments directly to the recipient’s account. A card and payment service is representing 76% of lending in the Bank Group. account using a mobile telephone number, offered to young people from the age of 16, performed well during the year. Läns- comprising a young person’s account and försäkringar Bank, which is one of the driv- bank card, internet and telephone banking ers of the Swish partnership, owns 10% of and digital services. The account also the company that manages and develops includes the Swish service. the service.

Market shares

Retail deposits Retail mortgages Managed funds under Länsförsäkringar’s own brand

Source: Statistics Sweden Source: Statistics Sweden Source: Moneymate

Länsförsäkringar 4.8% SEB 11.7% Länsförsäkringar 6.3% Nordea 14.2% Länsförsäkringar 3.4% Handelsbanken 11.0% Swedbank, 20.7% Danske Bank 2.1% Swedbank 24.4% Danske Bank 3.5% Swedbank Robur 20.5% AMF Fonder 3.1% Handelsbanken 18.4% SBAB 4.4% Handelsbanken 22.7% SBAB 8.0% SEB 11.9% SPP Fonder 4.2% Nordea 13.5% Other 24.4% SEB 14.2% Other 6.7% Nordea 11.5% Other 34.4%

The market position in retail deposits strengthened The market position in mortgages amounted to 6.3% The volume of managed funds under own brand to 4.8% (31 December 2017). (31 December 2017). represents a market share of 3.4% of the Swedish fund volume.

Länsförsäkringar Alliance 2017 Banking 31 Banking

Loans and credit quality

Credit process encourages all customers to make repay- Leasing, hire purchase and Länsförsäkringar Bank’s loans are granted ments by presenting a recommended unsecured loans in Sweden and in SEK. The geographic repayment plan, as well as an alternative Wasa Kredit offers leasing and hire pur- spread of lending to both retail and corpo- plan, at all customer meetings where mort- chase products that jointly represent 6% rate customers is well-diversified, with low gages are discussed. Even customers that of the Group’s loan portfolio. Wasa Kredit average loan commitments per customer. do not fall under the repayment require- also offers unsecured loans, comprising Loan origination is primarily directed ments are encouraged to pay off their a further 3% of the loan portfolio. towards retail mortgages for private indi- mortgage. Stricter repayment requirements viduals, small-scale family-owned agricul- on new mortgages for customers with debt Loans to small businesses tural operations with a low risk level and ratios of more than 450% will be imple- Loans to small businesses totalled SEK 1.8 finance-company products. Loans are mented in March 2018. billion at year-end, of which SEK 1.0 billion based on standardised, centrally estab- Loans to the public amounted to SEK comprised first-lien mortgages for indus- lished credit regulations and most credit 261 billion. Retail mortgages for private indi- trial and office properties and SEK 0.8 bil- decisions are made locally. In the business viduals’ housing comprise 76% of the loan lion operating credits to small businesses. model between Länsförsäkringar Bank and portfolio. First-lien mortgages, meaning The business is continuing to be developed the regional insurance companies, there is loans with a loan-to-value ratio (LTV) of up while maintaining low risk. a strong incentive to maintain high credit to 75%, account for 95% of retail mort- quality. The high credit quality of the loan gages. A total of 72% of the collateral for Impairment and impaired loans portfolio is the result of the low risk appe- retail mortgages comprises single-family The high credit quality of the loan portfolio tite, credit regulations combined with credit homes. The average loan commitment is low is a result of loan origination being based on scoring and local customer and market at SEK 1.2 M per borrower. 58% of borrow- a low risk tolerance. A settlement model is knowledge. The credit regulations impose ers have a commitment of less than SEK 2 applied regarding the commitment that the strict requirements on customers’ repay- M. The geographic spread of lending is regional insurance companies have for loan ment capacity and the quality of collateral. diverse, thus reducing Länsförsäkringar losses related to the business they have In connection with credit scoring, the Bank’s concentration risk in the event of originated. The model entails that the repayment capacity of borrowers is tested price declines in the market. regional insurance companies cover 80% of using “left to live on” calculations. These The weighted average loan-to-value the provision requirement on the date when calculations apply a significantly higher ratio for mortgage lending declined to 60%. an impairment is identified, by off-setting interest rate than the actual rate. Both the Market-value analyses of the collateral in this against a buffer of accrued commission. loan portfolio and value of the collateral are retail mortgages are performed continu- Loan losses amounted to SEK 58 M (38), continuously monitored and quality ously and a market-value update is per- corresponding to a loan loss level of 0.02% assured. Distribution and sales of formed at least once per year for all sing- (0.02). Reserves totalled SEK 268 M (250), finance-company products and credit deci- le-family homes and tenant-owned corresponding to a reserve ratio in relation sions on these products mainly take place apartments. to loans of 0.10% (0.11). In addition, SEK 88 through Wasa Kredit’s own channels. M (130) of the remuneration to the regional First-lien mortgages for agricultural insurance companies is withheld, in accor- Mortgages for private individuals operations dance with the settlement model described Politicians, authorities and banks focused A total of 94% of agricultural loans, repre- above. The reserve ratio in relation to loans, intently on housing prices and household senting 10% of the loan portfolio, comprises including withheld remuneration to the debt during the year. It is essential to main- first-lien mortgages. The remaining lending regional insurance companies, was tain high credit quality. Mortgage repay- comprises second-lien mortgages and 0.14% (0.17). ments are a key tool in ensuring that house- operating credits. Family-owned agricul- During the year, the bank completed its holds have stable and secure finances. tural operations account for 97% of agricul- work on implementing the new rules on Mortgage repayment requirements were tural loans. The average commitment is low provisions for loan losses in accordance introduced on new mortgages in June 2016, at SEK 2.4 M per borrower. Agricultural with IFRS 9. meaning that customers meeting these lending grew at a lower rate compared to requirements must make the minimum other lending during the year. required repayments. Länsförsäkringar

32 Banking Länsförsäkringar Alliance 2017 Banking

Funding and liquidity

Targets loans with maturities until 2024. The Swe- Deposits The aim of the funding operations is to dish covered bond market is one of Europe’s The share of deposits in the Group’s total ensure that the Group has a sufficiently largest and most liquid, which secures good financing amounted to 33% on 31 December strong liquidity reserve to manage turbulent access to long-term financing. 2017. Deposits were up 9% during the year, periods in capital markets, when funding strengthened as a result of the bank’s opportunities are limited or prevailing cir- Diversification healthy customer growth. cumstances render funding impossible. The Since all lending is in SEK, the Group has Group’s liquidity risk is controlled on the no structural need for financing in foreign Funding operations basis of a survival horizon, meaning how long currency. However, the bank has chosen to A relatively large portion of the funding all known cash flows can be met without conduct a certain portion of its capital mar- took place during the first six months of access to financing in the capital market. ket funding in international markets in an the year when there was high demand in effort to diversify and broaden the investor the market. Financing sources base. Funding has continuously taken place In March, Länsförsäkringar Hypotek The composition of financing is a result of through issuance of Euro Benchmark Cov- issued a seven-year Euro Benchmark- the bank being a retail bank with large ered Bonds. Länsförsäkringar Bank also covered bond for a nominal EUR 500 M, and mortgage lending operations. Accordingly, issued a senior unsecured Euro Benchmark in September, Länsförsäkringar Bank issued the main financing sources are deposits in bond for the first time in 2017, which has a five-year senior unsecured Euro Bench- Länsförsäkringar Bank and funding based increased funding diversification and mark-covered bond for a nominal EUR 500 M. on Länsförsäkringar Hypotek’s covered strengthened the brand in both the Swedish The transaction was the first step of a long- bonds. These covered bonds have the high- and European capital markets. In addition, term strategy to also build up an investor est credit ratings, Aaa from Moody’s and diversification takes place through issu- base in the Euro market for senior funding. AAA/Stable from S&P Global Ratings. Long- ances of bonds, primarily in NOK, CHF and In addition, Länsförsäkringar Hypotek term senior funding and short-term funding GBP. The international markets were pri- issued two Swedish benchmark bonds takes place in Länsförsäkringar Bank. The marily used for long maturities. during the year, LFH516 and LFH517, which Group endeavours to maintain a sound ba- mature in September 2023 and September lance of covered and senior unsecured Refinancing and liquidity risk management 2024, respectively. The average remaining funding and all capital market funding is The Bank Group works pro-actively with its term for the long-term financing is 2.6 years conducted under a number of funding pro- outstanding liabilities by repurchasing for senior unsecured bonds and 3.7 years grammes. The single most important source bonds with short remaining terms against for covered bonds. of financing is the Swedish covered bond issuance of long-term liabilities as a means market, where Länsförsäkringar Hypotek of managing and minimising the liquidity and Liquidity has a number of outstanding liquid bench- refinancing risk. The market risks that arise Effective long-term planning and low risk mark bonds. At year-end, Länsförsäkringar in the lending and funding operations are tolerance are the hallmarks of the bank’s Hypotek had six outstanding benchmark managed through derivative instruments. liquidity and funding management. A satis- factory liquidity reserve is in place to ensure that sufficient liquidity is always Financing sources Funding by currency available. The management and investment of the liquidity reserve are conservative. The liquidity reserve amounted to SEK 48 billion at 31 December 2017. The liquidity reserve is invested in securities with very high credit quality and that are eligible for transactions with the Riksbank and, where appropriate, with the ECB. A total of 58% of the liquidity reserve comprises Swedish covered bonds, 21% Swedish government Covered bonds, 48.3% Commercial papers, 0.3% SEK 79% NOK 1% securities, 8% other Swedish bonds with an Deposits, 32.8% Due to credit institutions, EUR 17% USD 0.5% AAA/Aaa credit rating, 6% bonds issued or Senior unsecured 1.3% CHF 2% GBP 0.5% guaranteed by European governments and bonds, 11.7% Subordinated debt, 0.9% multinational development banks, 4% Equity, 4.7% deposits with the Swedish National Debt Wholesale funding primarily takes place in the Swedish The largest source of financing in the Group is covered Office and central bank and 3% Nordic bonds, representing 48.3%. market and in SEK.

Länsförsäkringar Alliance 2017 Banking 33 * The calculation is based on Länsförsäkringar Bank’s interpreta- Maturity profile AAA/Aaa-rated covered bonds. Slightly tion of the Basel Committee’s most recent Net Stable Funding SEK bn more than SEK 600 M of the liquidity Ratio proposal. 40 reserve comprises green bonds. By utilising 35 the liquidity reserve, contractual undertak- Rating 30 ings can be met for more than two years Länsförsäkringar Bank’s long-term credit 25 without needing to secure new funding in rating is A1/Stable from Moody’s and A/ 20 the capital market. Stable from S&P Global Ratings. The short- 15 The Group’s Liquidity Coverage Ratio term credit ratings are A–1 from S&P Global 10 (LCR) for the consolidated situation on 31 Ratings and P–1 from Moody’s. Länsförsäk- 5 December 2017 according to the Swedish ringar Hypotek’s covered bonds maintained 0 Financial Supervisory Authority’s definition the highest credit rating of Aaa from 2018 2019 2020 2021 2022 2023 2024 2025– amounted to 202% and according to the Moody’s, and AAA/Stable from S&P Global Covered bonds European Commission’s delegated act to Ratings. Länsförsäkringar Hypotek is thus Senior unsecured funding 339%. The Net Stable Funding Ratio (NSFR) one of three issuers in the Swedish market Commercial papers for the consolidated situation amounted to for covered bonds with the highest rating 116%* on 31 December 2017. from both S&P Global Ratings and Moody’s. Comments on financial results, Länsförsäkringar Bank

Earnings and profitability ance companies as a result of a healthy Loan losses The Länsförsäkringar Bank Group’s operat- volume trend and strengthened profitability Loan losses amounted to SEK 58 M (38*), ing profit increased 9% to SEK 1,599 M in the business. net, corresponding to loan loss level of (1,467), due to higher net interest income. 0.02% (0.02). Impaired loans, gross, amoun- Net interest income rose 15% to SEK 3,996 M Expenses ted to SEK 278 M (240), corresponding to a (3,464) attributable to increased volumes Operating expenses increased 14% to SEK percentage of impaired loans, gross, of 0.11% and lower refinancing costs. The return on 1,601 M (1,399), of which 7 percentage points (0.11). Reserves totalled SEK 268 M (250), equity amounted to 10.0% (10.1). was due to higher staff costs associated corresponding to a reserve ratio in relation with additional personnel from Länsförsäk- to loans of 0.10% (0.11). In addition, SEK 88 Income ringar AB to the Bank Group’s Business M (130) of the remuneration to the regional Operating income includes SEK 42 M in divi- Service unit and the Economic Research insurance companies’ credit-risk commit- dends received from the sale of the holding Department, and the recruitment of new ments for generated business is withheld in in Visa Europe. Net losses from financial fund managers at Länsförsäkringar Fond- accordance with the settlement model. The items amounted to SEK –49 M (gains: 68) förvaltning. The underlying cost increase reserve ratio in relation to loans, including due to unrealised changes in the market amounted to 7% partly attributable to initia- withheld remuneration to the regional insur- value of financial items. Net commission tives for future-oriented IT investments. ance companies, was 0.14% (0.17). amounted to SEK –750 M (–662) due to The cost/income ratio before loan * The comparative figure includes dissolution of reserves of SEK 23 M. higher remuneration to the regional insur- losses amounted to 0.49 (0.48).

Länsförsäkringar Bank, Group

Income statement Balance sheet

SEK M 2017 2016 SEK M 31 Dec 2017 31 Dec 2016 Net interest income 3,996 3,464 ASSETS Net commission -750 -662 Treasury bills and other eligible bills 10,532 7,867 Other operating income 12 102 Loans to credit institutions 265 280 Total operating income 3,258 2,904 Loans to the public 261,444 226,705 Staff costs -549 -470 Bonds and other interest-bearing securities 35,718 32,810 Other administration expenses -960 -853 Intangible assets 969 488 Depreciation/amortisation and impairment of property Property and equipment 10 8 and equipment and intangible assets -92 -76 Other assets 6,428 7,793 Total operating expenses -1,601 -1,399 TOTAL ASSETS 315,366 275,951 Profit before loan losses 1,657 1,505 EQUITY AND LIABILITIES Loan losses, net -58 -38 Due to credit institutions 3,996 3,873 Operating profit 1,599 1,467 Deposits and funding from the public 99,404 91,207 Tax -362 -331 Debt securities in issue 188,407 156,000 NET PROFIT FOR THE YEAR 1,237 1,137 Subordinated liabilities 2,596 2,595 Other liabilities 6,635 9,094 Equity 14,328 13,182 TOTAL EQUITY AND LIABILITIES 315,366 275,951

34 Banking Länsförsäkringar Alliance 2017 Stronger customer protection and greater transparency make customers the winner

Life assurance and pension insurance 2017 was the year when the technological possibilities, new regulations and increasing customer expectations started to make a real impact and change the market to its very core. Länsförsäkringar approaches these opportunities and challenges in the market from a position of strength as the leader in its main market of unit- linked insurance for individual occupational pensions and with robust key figures and the aim of creating the best customer experiences in the market.

Länsförsäkringar Fondliv, Länsförsäkringar Fondliv offers customers measures were taken in 2017 to improve the managed assets: fund management, guarantee management offering, for example, Morningstar’s sus- and personal-risk insurance. Länsförsäk- tainability globes and Swesif’s sustainability ringar primarily targets small and medi- declaration were included in the price list. um-sized businesses. No new policies are The range was also expanded with new underwritten in Länsförsäkringar Liv, but funds that have a sustainability focus. This SEK bn the company manages traditional life assur- work will continue at high intensity in 2018. ance that was taken out before it was Länsförsäkringar received the highest sus- Länsförsäkringar Liv closed in 2011. tainability rating in Söderberg & Partners’ managed assets: Länsförsäkringar was one of the first and Max Matthiessen’s surveys during the companies in the industry to launch an year. entirely digital purchase service where All major brokers carried out new plan self-employed persons can take out occu- procurements in 2017 and it was very posi- pational pensions and personal insurance tive that Länsförsäkringar is an eligible SEK bn directly online. A fully digital health declara- manager in all of the plans. Länsförsäkringar tion is linked to the service. A service where aims to be the number one choice for cus- customers can calculate their future pen- tomers who want to procedure via brokers, sion and experiment with various parame- and these brokers are important partners ters was also launched, and has proven to and distributors for the business. be very popular and attracted many visi- tors. Furthermore, a fund guide is available Market to make choosing funds more easy for cus- Länsförsäkringar remains the number one tomers. The overall aim of these activities is in its main market – the unit-linked insur- to make everything simpler and more ance market for individual occupational understandable for Länsförsäkringar’s cus- pensions. Länsförsäkringar is the market tomers. During the year, an option was leader, measured in both premium income launched for customers via My Pages to add and in sales, according to fourth-quarter the Bevara pension progressive reduction 2017 statistics from Insurance Sweden. service. This service automatically reduces Measured in premium income, the mar- risk in the investment portfolio as retire- ket share was 18.7%, meaning that the mar- ment approaches. gin between Länsförsäkringar and the sec- Länsförsäkringar works to incorporate ond place company SEB is 1.9 percentage active sustainability efforts throughout the points. However, the market share declined entire operations, particularly in the form of by 1.2 percentage points compared with the offering responsible investments for cus- fourth quarter of 2016. Actual premium tomers’ pension savings. Accordingly, income for Länsförsäkringar increased 2% responsible investments are an integral part compared with 2016. At the same time, total of the fund-selection process. A number of premium income in the market rose 9%,

Länsförsäkringar Alliance 2017 Life assurance and pension insurance 35 Life assurance and pension insurance

which is the reason for the slightly lower gest trend. The performance of funds tar- imum of 70% of paid-in premiums with less market share. geting commodities, Russia and certain than five years until retirement. The assets Länsförsäkringar also retained its first hedge funds was weaker. are divided between equity and inter- place in the main market measured in new Both the scope and quality of Läns- est-bearing investments, with the inter- sales. The market share increased 0.5 of a försäkringar’s fund range was expanded in est-bearing portion always being at least percentage point compared with 2016. 2017 as part of realising a new fund strategy 40% and the equities portion may be as low Länsförsäkringar is the fourth largest of simplifications and greater choice for as zero. On 31 December 2017, 65% of the company in the total unit-linked insurance customers. More than 30 new funds from investments comprised interest-bearing market with a market share of 10.2% and in several different fund companies were investments and 35% equities. the overall occupational pension market, launched. The funds in the recommended Managed assets amounted to SEK 3.1 billion which includes traditional insurance and range are carefully analysed and assessed (2.9). The return rose to 6.0% (5.3). Both deposit insurance, Länsförsäkringar is the based on criteria including management equity and interest-bearing investments sixth largest company with a market share organisation, return and sustainability. also made a positive contribution to the of 5.3%. total return. Guarantee management Länsförsäkringar Fondliv’s unit-linked Länsförsäkringar Fondliv offers manage- Länsförsäkringar Liv’s traditional insurance and guarantee management ment of pension insurance carrying a guar- management Unit-linked insurance antee element regarding paid-in premiums. Länsförsäkringar Liv, which is closed for Slightly more than 90% of the funds in the The guarantee principle is that the cus- new business, conducts traditional life total fund range performed positively in tomer recoups premiums paid in to savings, assurance for its customers divided into 2017. More than 50% of the funds increased but with the possibility of additional returns. four portfolios: New Trad, Old Trad, New by more than 10%, with no funds declining Full guarantee, meaning “at least your pre- World and Insured Pension. Total managed more than 10%. 2017 was a positive mium back” applies for a minimum ten-year assets amounted to SEK 115 billion (116). stock-market year that resulted in a favour- savings period. A sliding scale is applied to able performance for many equities funds. shorter savings periods, with the guarantee New Trad Equities funds investing in Asia, small com- at 80% of paid-in premiums for periods of Länsförsäkringar Liv customers with tradi- panies and technology reported the stron- five to ten years until retirement, and a min- tionally managed insurance have had the

Market shares Unit-linked insurance

Total unit-linked insurance market Total occupational pension market Individual occupational pensions, unit-linked insurance Source: Insurance Sweden Source: Insurance Sweden Source: Insurance Sweden

Länsförsäkringar, 10.2% Skandia, 8.2% Länsförsäkringar, 5.3% Avanza, 5.1% Länsförsäkringar, 18.7% Swedbank Försäkring, Swedbank Försäkring, Nordea Liv, 8.0% Alecta, 21.3% Swedbank Försäkring, SEB, 16.8% 6.8% 14.4% SPP, 7.1% Folksam, 14.5% 4.9% SPP, 12.9% Danica, 5.6% SEB, 14.1% Danica, 5.3% Skandia, 12.4% SPP, 4.6% Skandia, 12.8% Nordea Liv, 4.9% Folksam, 13.4% Movestic, 4.3% AMF Pension, 10.8% Nordea Liv, 3.8% Movestic, 9.0% Folksam, 2.6% Handelsbanken, 9.7% SEB, 7.2% Handelsbanken, 7.2%

Länsförsäkringar’s market share in unit-linked Länsförsäkringar’s market share in the overall occupa- Länsförsäkringar is the market leader in the individual insurance, measured in premium income, amounted to tional pension market, measured in premium income, occupational pension sub-market, measured in premium 10.2% (10.8). amounted to 5.3% (5.7). income.

36 Life assurance and pension insurance Länsförsäkringar Alliance 2017 Life assurance and pension insurance

opportunity to transition their existing insurance to New Trad since 2013. Transi- tions from Old Trad to New Trad involve lower fees and a reduction in the guaranteed rate. The reduced guarantee rate allows capital in New Trad to be invested in other types of assets that have higher expected returns. Managed assets in New Trad amounted to SEK 21 billion (18). Investments as at 31 December 2017 comprised 60% interest-bearing investments, 34% equities, 4% alternative investments and 2% properties. The total share of interest-bearing investments increased slightly in 2017. Invest- ment return for New Trad amounted to 6.4% (4.3). The return was mainly attributable to equities investments, which contributed 5.5 percentage points. The bonus rate on 31 December 2017 was 6% (4). The bonus rate was raised from 5% to 6% on 1 October 2017. The average bonus rate since New Trad started in 2013 has been 6.4%.

Old Trad New World In Old Trad, Länsförsäkringar Liv manages New World is a traditional insurance policy assets of SEK 81 billion (85) on behalf of its whereby customers benefit from upturns customers. The aim of risk-taking in the Old on the equities market, while at the same Trad investment portfolio, given the prevail- time are guaranteed to recoup at least the ing low interest-rate environment, is to premiums paid, after deductions for ensure that the guaranteed bonus can be expenses and yield tax. realised also in the event of a negative mar- Managed assets amounted to SEK 12 ket trend. At the same time, balanced billion (11). The percentage of equities for risk-taking is applied to facilitate a reason- the New World management form is nor- able return on customers’ savings. mally 70% and the remaining 30% com- A large portion of the capital comprised prises interest-bearing investments. How- long-term interest-bearing investments in ever, the investment mix can vary within 2017. Investments as at 31 December 2017 defined intervals, with the percentage of comprised 87% interest-bearing invest- equities comprising 60–80%. Investment ments, 7% equities, 4% alternative invest- return amounted to 13.3% (5.1). ments and 2% properties. Investment return amounted to 2.7% (5.9). The bonus rate for 2017 was unchanged at 2%.

Länsförsäkringar Alliance 2017 Life assurance and pension insurance 37 Life assurance and pension insurance

Comments on financial results, Länsförsäkringar Fondliv

Earnings and profitability Total premium income increased 6% to SEK were also made in digital development, such Profit for Länsförsäkringar Fondliv 9,133 M (8,637), of which capital transferred as the launch of a digital purchase service strengthened in 2017 to SEK 604 M (516), to the company accounted for SEK 1,444 M where self-employed persons can take out mainly due to increased income from grow- (1,321). Premium income after ceded rein- occupational pensions directly online. ing managed assets. surance for insurance risk increased to SEK Total managed assets increased SEK 14 198 M (173). Commission income, which is Capital situation billion to SEK 128 billion (114) on 31 Decem- strongly linked to managed assets, Länsförsäkringar Fondliv’s capital situation ber 2017. The increase was mainly the result increased to SEK 1,583 M (1,412). is expressed and measured in accordance of a high value growth trend due to a Operating expenses rose to SEK 1,028 M with Solvency II as a ratio of own funds in favourable stock-market climate, but also a (973), primarily due to higher distribution relation to risk-based capital requirements. positive net inflow from existing and new and administration expenses from Länsförsäkringar Fondliv’s solvency ratio on customers. increased business volumes. Investments 31 December 2017 amounted to 152% (150).

Länsförsäkringar Fondliv

Income statement Balance sheet

SEK M 2017 2016 SEK M 31 Dec 2017 31 Dec 2016 Premium income after ceded reinsurance 198 173 ASSETS Fees from financial agreements 725 659 Assets 213 195 Investment income, net 10,343 8,049 Investments in associated companies – 29 Claims payments -98 -104 Other financial investment assets 3,614 3,501 Change in technical provisions -10,253 -7,947 Investment assets for which the policyholder bears the investment risk 125,344 112,050 Operating expenses -1,028 -973 Reinsurers’ portion of technical provisions 29 17 Other technical revenue and expenses 858 743 Receivables 794 588 Technical result for insurance operations 745 600 Other assets 298 429 Non-technical revenue/expenses -46 15 Prepaid expenses and accrued income 1,190 1,145 Profit before tax 699 615 TOTAL ASSETS 131,482 117,954 Tax -95 -99

NET PROFIT FOR THE YEAR 604 516 EQUITY, PROVISIONS AND LIABILITIES Equity 2,601 2,748 Technical provisions 2,762 2,471 Insurance commitments for which the policyholder bears the risk 125,583 112,225 Provisions 4 5 Deposits from reinsurers 29 17 Liabilities 460 463 Accrued expenses and deferred income 43 26 TOTAL EQUITY, PROVISIONS AND LIABILITIES 131,482 117,954

38 Life assurance and pension insurance Länsförsäkringar Alliance 2017 Life assurance and pension insurance

Comments on financial results, Länsförsäkringar Liv

Earnings and profitability tions is because the company is closed for Capital situation Profit for Länsförsäkringar Liv amounted to new business and thus the insurance portfo- Länsförsäkringar Liv’s capital situation is SEK 2,363 M (2,682). The positive earnings lio decreases over time, which is expected to expressed and measured in accordance derive from a positive investment income in lead to a slightly higher unit cost over time. with Solvency II as a ratio of own funds in New and Old Trad, and transitions from Old Operating expenses fell to SEK 417 M relation to risk-based capital requirement. Trad to New Trad, which continued to (447) in 2017, mainly due to lower develop- Länsförsäkringar Liv’s solvency ratio on strengthen earnings through lower techni- ment costs. 31 December 2017 increased to 207% (195). cal provisions. Investment income was positive for all Collective consolidation is calculated Changes in market interest rates affect management portfolios and totalled SEK 4.8 as the ratio between total capital and insur- Länsförsäkringar Liv’s earnings with rising billion (6.0). New World contributed SEK 1.4 ance capital. Collective consolidation on market interest rates leading to lower liabil- billion, which does not affect earnings and 31 December 2017 amounted to 117% (114) ities to policyholders since future commit- instead is transferred directly to the policy- in New Trad and 123% (125) in Old Trad. ments are discounted with the market holders. Länsförsäkringar Liv has worked actively interest rate. However, the company can In December 2017, Länsförsäkringar Liv on measures to strengthen the company’s largely protect itself from interest-rate divested two property-owning subsidiaries balance sheet and own funds for several changes impacting earnings by matching to Humlegården Fastigheter AB (publ) years. A strengthened balance sheet pro- assets and liabilities against each other. In (referred to below as Humlegården) in vides the company with greater flexibility 2017, about 80% of the interest-rate sensi- exchange for payment in newly issued and opportunities to invest in asset classes tivity of liabilities was matched, generating a shares in Humlegården and cash and cash with higher expected returns. These mea- positive earnings effect of about SEK 100 M equivalents. Based on this transaction, sures have resulted in equity strengthening when long-term market interest rates rose. Länsförsäkringar Liv became the second from SEK 10.9 billion to SEK 24.4 billion The Swedish ten-year government bond largest owner of Humlegården with a hold- between 2012 and 2017. rate increased by just under 25 basis points. ing of 11.6%. The transaction better diversi- Transitions from Old Trad to New Trad Liabilities to policyholders declined SEK fies Länsförsäkringar Liv’s property expo- also contributed to the strengthened capi- 2.0 billion (1.2) during the period, primarily sure and provides an interest in a property tal situation in 2017. Such transitions to New due to negative cash flows, meaning that portfolio that is deemed to be of high qual- Trad have strengthened own funds by a payouts and external transfers exceeded ity with great potential. total of SEK 4.8 billion since 2013, of which premium payments. The assumption for Länsförsäkringar Liv is operated accord- SEK 0.4 billion in 2017. future operating expenses was adjusted in ing to mutual principles and is not consoli- 2017, which led to higher liabilities of SEK dated in Länsförsäkringar AB. 685 M. The increase in the expense assump-

Länsförsäkringar Liv, Group

Income statement Balance sheet

SEK M 2017 2016 SEK M 31 Dec 2017 31 Dec 2016 Premium income after ceded reinsurance 1,533 1,720 ASSETS Investment income, net 4,770 6,027 Investment assets 115,349 117,382 Claims payments -5,404 -5,683 Reinsurers’ portion of technical provisions 472 477 Change in technical provisions 1,990 1,221 Receivables 1,219 1,909 Operating expenses -417 -447 Other assets 5,421 4,763 Technical result for insurance operations 2,472 2,838 Prepaid expenses and accrued income 102 144 Non-technical revenue/expenses -96 -110 TOTAL ASSETS 122,563 124,675 Profit before tax 2,376 2,728 EQUITY, PROVISIONS AND LIABILITIES Tax -13 -46 Equity 24,405 23,050 NET PROFIT FOR THE YEAR 2,363 2,682 Technical provisions 90,166 92,217 Provisions for other risks and expenses 149 240 Deposits from reinsurers 472 477 Liabilities 7,162 8,478 Accrued expenses and deferred income 210 213 TOTAL EQUITY, PROVISIONS AND LIABILITIES 122,563 124,675

Länsförsäkringar Alliance 2017 Life assurance and pension insurance 39 The real-estate brokerage with the most satisfied customers in the market

Real-estate brokerage Through Länsförsäkringar Fastighetsförmedling, Länsförsäkringar offers a total solution for reliable mortgage transactions: real-estate brokerage, banking and insurance services all in one company. Real-estate brokerage is also a key customer meeting for sales of mortgages and insurance.

Number of single-family homes sold Länsförsäkringar Fastighetsförmedling has national estate-agent chains by always Source: Värderingsdata 160 branches throughout Sweden. Strong being locally based. growth has advanced Länsförsäkringar Länsförsäkringar Fastighetsförmedling Fastighetsförmedling to the position of third can summarise strong sales figures for 2017. largest brokerage in Sweden. Länsförsäk- A total of 21,801 (19,938) properties were ringar Fastighetsförmedling is Sweden’s brokered between January and December, fastest growing estate-agent chain for the of which 11,896 (10,923) tenant-owned second consecutive year had the most apartments and 8,816 (7,998) single-family satisfied customers according to the homes. The number of properties sold Swedish Quality Index’s customer satisfac- increased a total of more than 9% year on tion survey for the estate-agent industry. year. Commission income rose 12% to SEK Länsförsäkringar Fas- Bjurfors 3.2% tighetsförmedling 11.5% HusmanHagberg 3.1% The real-estate brokerage is an inte- 905 M (808). The total sales value for the Fastighetsbyrån 25.7% Mäklarringen 1.5% grated part of the local regional insurance period amounted to SEK 48.7 billion (41.9). Svensk Fastighets- Hemverket 1.4% companies’ full-service offering. The aim is Länsförsäkringar’s sales of single-family förmedling 14.6% ERA 1.3% to offer more than just the brokerage and homes increased in 2017, resulting in SEK Mäklarhuset 4.8% Other brokers and private sale of residential properties. The opera- 4.0 billion (3.2) in first-lien mortgages in SkandiaMäklarna 3.9% 29.0% tions are conducted in franchise form, Länsförsäkringar’s mortgage institution, Länsförsäkringar Fastighetsförmedling is the third whereby the regional insurance company divided between 1,766 (1,560) transactions. largest brokerage group, measured in number of acts as the franchiser for the local branch. This was achieved despite the total market single-family homes. Tenant-owned apartments are not included in the industry statistics. This also means that Länsförsäkringar for single-family homes declining 4% during Fastighetsförmedling differs from other the year, with the number of land registra- tion certificates totalling 71,472 (74,559).

Number of single-family homes and tenant- owned apartments sold by Länsförsäkringar Single-family homes sold with loans invested Fastighetsförmedling in Länsförsäkringar Hypotek Value of sales of single-family homes 2017 Billion 000s SEK M Number SEK M 50 25 4,000 2,000 50

40 20 3,000 1,500 40

30 15 30 2,000 1,000

20 10 20 1,000 500 10 5 10 0 0 0 0 2013 2014 2015 2016 2017 F Länsf Bjurf Skandiamäklarna Mäklarhuset HusmanHagber Mäklarringen ERA Hemverke 0 F F Svensk astighetsf 2013 2014 2015 2016 2017 astighetsb astighetsf or Total value, SEK billion Number of residential Loan total, SEK M Number of loans örsäkringar s properties sold, t örmedling örmedling thousands yrån g The number of residential properties sold increased Sales of single-family homes resulted in SEK 4.0 billion 9% (1). (3.5) in first-lien mortgages in Länsförsäkringar Hypotek.

The sales value of single-family homes for Länsförsäk- ringar Fastighetsförmedling amounted to SEK 19.5 billion (17.4). Tenant-owned apartments are not included in the diagram and, including them, the value of sales was SEK 44.2 billion (38.9).

40 Real-estate brokerage Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures

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

Contents

42 Länsförsäkringar Alliance, non-life insurance 44 Länsförsäkringar Norrbotten 44 Länsförsäkringar Västerbotten 44 Länsförsäkringar Jämtland 45 Länsförsäkringar Västernorrland 45 Länsförsäkringar Gävleborg 45 Dalarnas Försäkringsbolag 46 Länsförsäkringar Värmland 46 Länsförsäkringar Uppsala 46 Länsförsäkringar Bergslagen 47 Länsförsäkringar Stockholm 47 Länsförsäkringar Södermanland 47 Länsförsäkringar Göteborg och Bohuslän 48 Länsförsäkringar Skaraborg 48 Länsförsäkringar Östgöta 48 Länsförsäkringar Älvsborg 49 Länsförsäkringar Gotland 49 Länsförsäkringar Jönköping 49 Länsförsäkringar Halland 50 Länsförsäkring Kronoberg 50 Länsförsäkringar Kalmar län 50 Länsförsäkringar Blekinge 51 Länsförsäkringar Göinge- Kristianstad 51 Länsförsäkringar Skåne

Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures 41 Länsförsäkringar Alliance 2017

NON-LIFE INSURANCE, SEK M Result after ceded reinsurance 2017 Norrbotten Västerbotten Jämtland Västernorrland Gävleborg Dalarna Värmland Uppsala Bergslagen Stockholm Södermanland Premiums earned 378 804 436 457 486 1,229 611 777 1,234 1,860 597 1,414 706 1,386 1,217 215 1,058 708 503 765 333 500 2,206 5,623 25,504 25,504 Investment income transferred from financial operations 22 24 12 15 8 21 3 9 14 15 7 90 12 21 39 3 12 30 4 13 4 6 24 26 356 356 Claims payments –270 –605 –341 –374 –356 –939 –469 –620 –1,008 –1,402 –467 –1,089 –478 –999 –836 –121 –823 –494 –366 –589 –247 –351 –1,640 –3,764 –18,571 –18,571 Operating expenses –72 –130 –79 –96 –104 –194 –106 –135 –198 –361 –84 –302 –118 –245 –186 –41 –182 –140 –89 –125 –63 –99 –368 –1,167 –4,629 –4,629 Other income/expenses –1 –5 –2 –3 –3 –7 –3 –6 –7 –6 –3 –37 –3 –7 –6 –1 –6 –4 –3 –4 –2 –3 –11 259 –130 –130 Technical result from non-life insurance operations before bonuses and discounts 57 87 27 –1 30 110 36 26 35 106 50 77 119 157 228 54 58 99 49 60 25 53 211 977 2,529 2,529 Bonuses and discounts –14 –66 – – – –178 –30 – –165 – –103 –193 –40 –238 –70 –70 –47 –133 –60 –59 –40 –92 –200 – –1,798 –1,798 Technical result for non-life insurance operations 42 21 27 –1 30 –68 6 26 –130 106 –53 –116 79 –81 158 –16 11 –34 –11 1 –15 –39 11 977 731 731 Total investment income 87 263 203 125 135 661 121 269 657 313 303 889 203 654 728 76 382 312 168 294 131 228 963 1,001 6,969 6,969 Investment income transferred to insurance operations –22 –24 –12 –15 –8 –21 –3 –9 –14 –15 –7 –90 –12 –21 –39 –3 –12 –30 –4 –13 –4 –6 –24 –26 –434 –434 Other income/expenses 2 8 –2 –9 8 22 4 31 27 59 3 19 6 30 12 9 –22 –2 3 –3 1 3 17 –416 –189 1,100 Operating profit 109 269 215 100 166 594 128 316 541 463 246 702 275 583 860 67 360 247 157 279 114 186 967 1,536 7,078 8,367

Balance sheet, 31 Dec 2017

ASSETS Investment assets Shares in Länsförsäkringar AB 329 881 595 680 774 1,582 517 1,103 1,287 2,114 844 1,534 702 1,722 1,509 206 1,233 856 531 800 318 824 2,267 – – – Other shares and participations 499 1,798 1,132 436 521 2,871 576 1,183 2,944 1,059 1,912 4,103 903 3,066 4,441 518 1,905 1,605 795 1,733 697 1,155 5,040 1,488 42,381 43,463 Bonds and other interest-bearing securities 287 1,204 644 650 709 1,717 552 1,132 1,073 2,281 826 1,232 856 1,926 1,341 514 1,585 846 645 782 492 720 2,091 5,369 29,475 68,114 Other investment assets 185 432 99 24 0 596 249 15 710 310 8 875 419 1,161 237 57 579 363 410 406 274 232 570 16,719 29,573 21,295 Total investment assets 1,300 4,315 2,471 1,791 2,004 6,766 1,894 3,433 6,014 5,764 3,590 7,743 2,880 7,875 7,528 1,295 5,301 3,670 2,381 3,721 1,781 2,931 9,969 23,575 101,429 132,872 Reinsurers’ portion of technical provisions 184 259 242 161 547 388 280 314 344 307 230 309 255 486 372 119 467 210 169 275 178 182 673 10,447 10,447 10,475 Receivables and other assets 158 371 229 208 370 541 256 401 558 849 265 493 317 751 478 101 442 253 202 308 157 212 838 2,579 11,147 413,979 Cash and bank balances 250 142 133 68 48 510 767 101 573 110 93 114 69 196 183 65 263 95 106 142 47 287 339 637 5,340 5,634 Prepaid expenses and accrued income 9 42 36 14 27 127 27 49 26 55 36 191 15 71 71 41 36 125 13 26 9 20 167 323 1,548 3,162 Total assets 1,901 5,129 3,110 2,241 2,995 8,332 3,224 4,298 7,515 7,086 4,214 8,850 3,536 9,379 8,632 1,621 6,510 4,353 2,872 4,472 2,172 3,632 11,986 37,562 129,911 566,122

EQUITY AND LIABILITIES Equity 742 2,510 1,434 896 1,039 4,122 1,322 1,795 3,465 1,339 2,046 4,394 719 4,644 4,831 815 3,030 2,086 1,328 2,217 928 1,817 5,274 18,564 54,950 61,243 Untaxed reserves – – – – – – – – – 1,800 – – 621 – – – – – – – – – – – – – Technical provisions (before ceded reinsurance) 904 1,868 1,255 1,115 1,602 3,270 1,488 1,946 2,941 3,137 1,583 3,324 1,817 3,490 2,869 638 2,575 1,713 1,191 1,729 998 1,389 5,080 16,141 57,114 59,876 Other provisions and liabilities 204 626 355 211 339 800 319 465 942 558 571 1,052 353 1,199 888 162 876 530 336 514 237 412 1,550 1,179 14,748 438,906 Accrued expenses and deferred income 51 125 66 18 15 140 95 92 167 252 14 81 26 46 44 6 27 24 16 12 8 15 83 1,678 3,100 6,098 Total equity and liabilities 1,901 5,129 3,110 2,241 2,995 8,332 3,224 4,298 7,515 7,086 4,214 8,850 3,536 9,379 8,632 1,621 6,510 4,353 2,872 4,472 2,172 3,632 11,986 37,562 129,911 566,122

Solvency capital / Total capital 897 2,923 1,715 1,016 1,276 4,728 1,592 2,168 4,135 3,546 2,415 5,184 1,533 5,577 5,503 925 3,545 2,452 1,564 2,603 1,142 2,115 6,307 19,580 66,149 72,442 Solvency margin 237 353 384 218 257 375 256 268 327 184 398 356 211 391 440 419 326 339 300 340 332 414 278 341 253 –

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

42 Länsförsäkringar Alliance in figures Länsförsäkringar Alliance 2017 Bohuslän

NON-LIFE INSURANCE, SEK M

Södermanland Göteborg och Skaraborg Östgöta Älvsborg Gotland Jönköping Halland Kronoberg Kalmar Blekinge Göinge-Kristianstad Skåne Länsförsäkringar AB Group Länsförsäkringar Alliance Länsförsäkringar Alliance Result after ceded reinsurance 2017 excl. Bank & Fondliv Non-life insurance operations Premiums earned 378 804 436 457 486 1,229 611 777 1,234 1,860 597 1,414 706 1,386 1,217 215 1,058 708 503 765 333 500 2,206 5,623 25,504 25,504 Investment income transferred from financial operations 22 24 12 15 8 21 3 9 14 15 7 90 12 21 39 3 12 30 4 13 4 6 24 26 356 356 Claims payments –270 –605 –341 –374 –356 –939 –469 –620 –1,008 –1,402 –467 –1,089 –478 –999 –836 –121 –823 –494 –366 –589 –247 –351 –1,640 –3,764 –18,571 –18,571 Operating expenses –72 –130 –79 –96 –104 –194 –106 –135 –198 –361 –84 –302 –118 –245 –186 –41 –182 –140 –89 –125 –63 –99 –368 –1,167 –4,629 –4,629 Other income/expenses –1 –5 –2 –3 –3 –7 –3 –6 –7 –6 –3 –37 –3 –7 –6 –1 –6 –4 –3 –4 –2 –3 –11 259 –130 –130 Technical result from non-life insurance operations before bonuses and discounts 57 87 27 –1 30 110 36 26 35 106 50 77 119 157 228 54 58 99 49 60 25 53 211 977 2,529 2,529 Bonuses and discounts –14 –66 – – – –178 –30 – –165 – –103 –193 –40 –238 –70 –70 –47 –133 –60 –59 –40 –92 –200 – –1,798 –1,798 Technical result for non-life insurance operations 42 21 27 –1 30 –68 6 26 –130 106 –53 –116 79 –81 158 –16 11 –34 –11 1 –15 –39 11 977 731 731 Total investment income 87 263 203 125 135 661 121 269 657 313 303 889 203 654 728 76 382 312 168 294 131 228 963 1,001 6,969 6,969 Investment income transferred to insurance operations –22 –24 –12 –15 –8 –21 –3 –9 –14 –15 –7 –90 –12 –21 –39 –3 –12 –30 –4 –13 –4 –6 –24 –26 –434 –434 Other income/expenses 2 8 –2 –9 8 22 4 31 27 59 3 19 6 30 12 9 –22 –2 3 –3 1 3 17 –416 –189 1,100 Operating profit 109 269 215 100 166 594 128 316 541 463 246 702 275 583 860 67 360 247 157 279 114 186 967 1,536 7,078 8,367

Balance sheet, 31 Dec 2017

Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures 43 Länsförsäkringar Länsförsäkringar Länsförsäkringar Norrbotten Västerbotten Jämtland President: Kjell Lindfors President: Göran Spetz President: Tomas Eriksson Board Chairman: Mats Fabricius Board Chairman: Maria Wallin Wållberg Board Chairman: Karin Mattsson Weijber

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before bonuses and discounts, SEK M 124 113 bonuses and discounts, SEK M 335 267 bonuses and discounts, SEK M 215 127 Total assets, SEK M 1,901 1,758 Total assets, SEK M 5,129 4,656 Total assets, SEK M 3,110 2,839 Solvency ratio, % 241 220 Solvency ratio, % 248 222 Solvency ratio, % 228 192 Number of employees 75 74 Number of employees 177 171 Number of employees 103 100 Number of branches 3 3 Number of branches 3 3 Number of branches 3 3 Bank Bank Bank Deposits, SEK M 977 911 Deposits, SEK M 4,054 3,773 Deposits, SEK M 2,232 2,128 Loans, SEK M 298 285 Loans, SEK M 1,407 1,332 Loans, SEK M 1,087 951 Retail mortgages, SEK M 2,780 2,419 Retail mortgages, SEK M 7,362 6,232 Retail mortgages, SEK M 3,359 2,844 Fund volumes managed, SEK M 242 190 Fund volumes managed, SEK M 1,692 1,326 Fund volumes managed, SEK M 203 178 Number of customers 10,600 10,000 Number of customers 31,600 29,800 Number of customers 16,300 15,500 Life assurance Life assurance Life assurance Premium income, SEK M 76 76 Premium income, SEK M 186 175 Premium income, SEK M 95 92 Total insurance capital, SEK M 2,155 2,124 Total insurance capital, SEK M 4,502 4,346 Total insurance capital, SEK M 2,406 2,313 Number of customers 17,000 17,200 Number of customers 30,700 31,000 Number of customers 17,700 17,900 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 378 346 Premiums earned, SEK M 804 751 Premiums earned, SEK M 436 418 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M 57 22 operations, SEK M 87 39 operations, SEK M 27 12 Bonuses and discounts to the Bonuses and discounts to the Combined ratio after ceded customers, SEK M 14 13 customers, SEK M 66 61 reinsurance, % 96 103 Combined ratio after ceded Combined ratio after ceded Total return on asset reinsurance, % 94 105 reinsurance, % 100 107 management, % 9 7 Total return on asset Total return on asset Number of customers 58,600 57,400 management, % 6 9 management, % 6 6 Number of customers 65,900 63,400 Number of customers 124,100 120,200

44 Länsförsäkringar Alliance in figures Länsförsäkringar Alliance 2017 Länsförsäkringar Länsförsäkringar Dalarnas Västernorrland Gävleborg Försäkringsbolag President: Mikael Bergström President: Per-Ove Bäckström President: Anders Grånäs Board Chairman: Stig Högberg Board Chairman: Mats Åstrand Board Chairman: Maria Engholm

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before bonuses and discounts, SEK M 100 67 bonuses and discounts, SEK M 166 96 bonuses and discounts, SEK M 772 640 Total assets, SEK M 2,241 2,120 Total assets, SEK M 2,995 2,746 Total assets, SEK M 8,332 7,495 Solvency ratio, % 185 160 Solvency ratio, % 200 177 Solvency ratio, % 193 213 Number of employees 117 116 Number of employees 146 146 Number of employees 289 279 Number of branches 5 5 Number of branches 6 6 Number of branches 7 7 Bank Bank Bank Deposits, SEK M 1,744 1,603 Deposits, SEK M 2,664 2,508 Deposits, SEK M 5,282 4,847 Loans, SEK M 540 512 Loans, SEK M 740 792 Loans, SEK M 1,517 1,443 Retail mortgages, SEK M 2,896 2,497 Retail mortgages, SEK M 5,614 5,124 Retail mortgages, SEK M 8,777 7,747 Fund volumes managed, SEK M 787 555 Fund volumes managed, SEK M 770 588 Fund volumes managed, SEK M 2,122 1,507 Number of customers 25,200 24,300 Number of customers 26,300 25,100 Number of customers 47,700 44,800 Life assurance Life assurance Life assurance Premium income, SEK M 117 116 Premium income, SEK M 113 113 Premium income, SEK M 325 314 Total insurance capital, SEK M 3,733 3,635 Total insurance capital, SEK M 3,677 3,549 Total insurance capital, SEK M 7,531 7,135 Number of customers 23,900 24,300 Number of customers 28,200 28,400 Number of customers 45,500 45,900 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 457 440 Premiums earned, SEK M 486 468 Premiums earned, SEK M 1,229 1,161 Technical result for insurance Technical result for insurance Technical result for insurance operations, SEK M –1 7 operations, SEK M 30 7 operations, SEK M 110 126 Combined ratio after ceded Combined ratio after ceded Bonuses and discounts to the reinsurance, % 103 104 reinsurance, % 95 104 customers, SEK M 178 221 Total return on asset Total return on asset Combined ratio after ceded management, % 8 7 management, % 7 7 reinsurance, % 101 100 Number of customers 73,400 73,100 Number of customers 85,700 84,500 Total return on asset management, % 10 9 Number of customers 154,600 151,700

Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures 45 Länsförsäkringar Länsförsäkringar Länsförsäkringar Värmland Uppsala Bergslagen President: Ulrika Obstfelder Petersson President: Ulrica Hedman President: Mikael Sundquist Board Chairman: Patrik Sandin Board Chairman: Bengt-Erik Jansson Board Chairman: Bengt-Erik Lindgren

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before bonuses and discounts, SEK M 158 182 bonuses and discounts, SEK M 316 188 -bonuses and discounts, SEK M 705 462 Total assets, SEK M 3,224 3,045 Total assets, SEK M 4,298 3,940 Total assets, SEK M 7,515 6,531 Solvency ratio, % 265 260 Solvency ratio, % 196 196 Solvency ratio, % 203 201 Number of employees 98 97 Number of employees 185 180 Number of employees 285 280 Number of branches 4 4 Number of branches 6 6 Number of branches 7 7 Bank Bank Bank Deposits, SEK M 1,553 1,343 Deposits, SEK M 4,127 3,874 Deposits, SEK M 6,690 6,173 Loans, SEK M 685 628 Loans, SEK M 1,671 1,605 Loans, SEK M 3,617 3,560 Retail mortgages, SEK M 3,198 2,670 Retail mortgages, SEK M 9,880 8,778 Retail mortgages, SEK M 13,931 11,880 Fund volumes managed, SEK M 410 311 Fund volumes managed, SEK M 1,163 918 Fund volumes managed, SEK M 1,951 1,390 Number of customers 14,400 13,200 Number of customers 33,800 32,100 Number of customers 57,100 52,700 Life assurance Life assurance Life assurance Premium income, SEK M 109 111 Premium income, SEK M 272 276 Premium income, SEK M 543 525 Total insurance capital, SEK M 3,158 3,059 Total insurance capital, SEK M 7,316 7,023 Total insurance capital, SEK M 10,068 9,433 Number of customers 23,300 23,500 Number of customers 46,600 46,900 Number of customers 58,900 58,100 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 611 582 Premiums earned, SEK M 777 722 Premiums earned, SEK M 1,234 1,143 Technical result for insurance Technical result for insu-rance Technical result for insu-rance operations, SEK M 36 64 operations, SEK M 26 –53 operations, SEK M 35 –22 Combined ratio after ceded Combined ratio after ce-ded Bonuses and discounts to the reinsurance, % 94 89 reinsurance, % 97 110 customers, SEK M 165 – Total return on asset Total return on asset Combined ratio after ce-ded management, % 5 6 -management, % 9 9 reinsurance, % 98 103 Number of customers 94,400 93,500 Number of customers 121,100 120,300 Total return on asset -management, % 11 10 Number of customers 194,000 190,300

46 Länsförsäkringar Alliance in figures Länsförsäkringar Alliance 2017 Länsförsäkringar Länsförsäkringar Länsförsäkringar Stockholm Södermanland Göteborg och Bohuslän President: Fredrik Bergström President: Anna-Greta Lundh President: Ricard Robbstål Board Chairman: Christer Villard Board Chairman: Caesar Åfors Board Chairman: Hans Ljungqvist

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before -bonuses and discounts, SEK M 463 441 -bonuses and discounts, SEK M 349 252 -bonuses and discounts, SEK M 895 723 Total assets, SEK M 7,086 6,418 Total assets, SEK M 4,214 3,737 Total assets, SEK M 8,850 8,052 Solvency ratio, % 215 208 Solvency ratio, % 192 213 Solvency ratio, % 181 191 Number of employees 344 312 Number of employees 129 130 Number of employees 355 326 Number of branches 4 4 Number of branches 4 4 Number of branches 11 10 Bank Bank Bank Deposits, SEK M 7,577 7,430 Deposits, SEK M 2,595 2,409 Deposits, SEK M 6,130 5,536 Loans, SEK M 1,628 1,564 Loans, SEK M 974 905 Loans, SEK M 1,409 1,277 Retail mortgages, SEK M 29,032 25,724 Retail mortgages, SEK M 5,950 5,185 Retail mortgages, SEK M 18,027 14,184 Fund volumes managed, SEK M 2,211 1,840 Fund volumes managed, SEK M 712 541 Fund volumes managed, SEK M 1,890 1,290 Number of customers 92,200 88,200 Number of customers 23,300 22,100 Number of customers 58,400 53,800 Life assurance Life assurance Life assurance Premium income, SEK M 2,407 2,404 Premium income, SEK M 169 159 Premium income, SEK M 1,058 1,015 Total insurance capital, SEK M 58,013 54,735 Total insurance capital, SEK M 4,289 4,089 Total insurance capital, SEK M 20,937 19,538 Number of customers 224,300 220,100 Number of customers 28,900 28,900 Number of customers 92,700 91,000 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 1,860 1,766 Premiums earned, SEK M 597 565 Premiums earned, SEK M 1,414 1,342 Technical result for insu-rance Technical result for insu-rance Technical result for insu-rance operations, SEK M 106 115 operations, SEK M 50 –3 operations, SEK M 77 202 Combined ratio after ce-ded Combined ratio after ce-ded Bonuses and discounts to the reinsurance, % 95 94 reinsurance, % 92 103 customers, SEK M 193 210 Total return on asset Total return on asset Combined ratio after ce-ded -management, % 6 6 -management, % 9 9 reinsurance, % 98 92 Number of customers 353,400 351,500 Number of customers 93,300 93,500 Total return on asset -management, % 13 10 Number of customers 233,800 225,300

Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures 47 Länsförsäkringar Länsförsäkringar Länsförsäkringar Skaraborg Östgöta Älvsborg President: Jonas Rosman President: Sven Eggefalk President: Örian Söderberg Board Chairman: Eric Grimlund Board Chairman: Peter Lindgren Board Chairman: Lars Hallkvist

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before -bonuses and discounts, SEK M 315 170 -bonuses and discounts, SEK M 820 690 -bonuses and discounts, SEK M 930 736 Total assets, SEK M 3,536 3,154 Total assets, SEK M 9,379 8,702 Total assets, SEK M 8,632 7,657 Solvency ratio, % 174 173 Solvency ratio, % 234 251 Solvency ratio, % 208 211 Number of employees 164 150 Number of employees 341 342 Number of employees 288 262 Number of branches 8 8 Number of branches 7 7 Number of branches 9 9 Bank Bank Bank Deposits, SEK M 4,222 3,759 Deposits, SEK M 7,970 7,337 Deposits, SEK M 4,945 4,689 Loans, SEK M 2,222 2,028 Loans, SEK M 3,478 3,436 Loans, SEK M 1,749 1,776 Retail mortgages, SEK M 6,155 5,183 Retail mortgages, SEK M 14,844 12,654 Retail mortgages, SEK M 11,703 10,650 Fund volumes managed, SEK M 1,111 1,089 Fund volumes managed, SEK M 2,821 2,211 Fund volumes managed, SEK M 1,861 1,310 Number of customers 40,800 38,200 Number of customers 64,300 60,400 Number of customers 70,600 68,500 Life assurance Life assurance Life assurance Premium income, SEK M 167 160 Premium income, SEK M 908 867 Premium income, SEK M 301 293 Total insurance capital, SEK M 4,732 4,560 Total insurance capital, SEK M 14,260 13,068 Total insurance capital, SEK M 8,145 7,769 Number of customers 31,700 31,600 Number of customers 66,600 66,000 Number of customers 56,600 56,500 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 706 671 Premiums earned, SEK M 1,386 1,327 Premiums earned, SEK M 1,217 1,151 Technical result for insu-rance Technical result for insu-rance Technical result for insu-rance operations, SEK M 119 52 operations, SEK M 157 99 operations, SEK M 228 210 Bonuses and discounts to the Bonuses and discounts to the Bonuses and discounts to the customers, SEK M 40 – customers, SEK M 238 226 customers, SEK M 70 127 Combined ratio after ce-ded Combined ratio after ce-ded Combined ratio after ce-ded reinsurance, % 84 96 reinsurance, % 90 94 reinsurance, % 88 90 Total return on asset Total return on asset Total return on asset -management, % 8 7 -management, % 9 9 -management, % 12 11 Number of customers 106,700 104,100 Number of customers 198,300 194,000 Number of customers 173,000 170,000

48 Länsförsäkringar Alliance in figures Länsförsäkringar Alliance 2017 Länsförsäkringar Länsförsäkringar Länsförsäkringar Gotland Jönköping Halland President: Mariette Nicander President: Henrietta Hansson President: Christian Bille Board Chairman: Eva Wetterdal Board Chairman: Göran Lindell Board Chairman: Karin Starrin

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before -bonuses and discounts, SEK M 137 89 -bonuses and discounts, SEK M 407 438 -bonuses and discounts, SEK M 380 323 Total assets, SEK M 1,621 1,493 Total assets, SEK M 6,510 6,045 Total assets, SEK M 4,353 4,198 Solvency ratio, % 267 265 Solvency ratio, % 211 207 Solvency ratio, % 234 227 Number of employees 71 67 Number of employees 217 197 Number of employees 153 156 Number of branches 2 2 Number of branches 5 6 Number of branches 6 6 Bank Bank Bank Deposits, SEK M 2,099 1,869 Deposits, SEK M 5,177 4,763 Deposits, SEK M 4,188 3,847 Loans, SEK M 1,693 1,711 Loans, SEK M 2,345 2,234 Loans, SEK M 3,006 3,000 Retail mortgages, SEK M 3,379 3,208 Retail mortgages, SEK M 7,503 6,265 Retail mortgages, SEK M 8,574 7,349 Fund volumes managed, SEK M 540 412 Fund volumes managed, SEK M 1,728 1,227 Fund volumes managed, SEK M 1,357 1,013 Number of customers 15,600 14,900 Number of customers 37,800 34,400 Number of customers 38,900 37,100 Life assurance Life assurance Life assurance Premium income, SEK M 67 68 Premium income, SEK M 288 285 Premium income, SEK M 210 210 Total insurance capital, SEK M 1,400 1,315 Total insurance capital, SEK M 7,770 7,348 Total insurance capital, SEK M 5,785 5,585 Number of customers 11,000 11,000 Number of customers 41,300 41,100 Number of customers 41,700 41,600 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 215 207 Premiums earned, SEK M 1,058 990 Premiums earned, SEK M 708 677 Technical result for insu-rance Technical result for insu-rance Technical result for insu-rance operations, SEK M 54 11 operations, SEK M 58 128 operations, SEK M 99 106 Bonuses and discounts to the Bonuses and discounts to the Bonuses and discounts to the customers, SEK M 70 50 customers, SEK M 50 100 customers, SEK M 133 96 Combined ratio after ce-ded Combined ratio after ce-ded Combined ratio after ce-ded reinsurance, % 76 96 reinsurance, % 95 89 reinsurance, % 94 94 Total return on asset Total return on asset Total return on asset -management, % 7 7 -management, % 8 8 -management, % 9 9 Number of customers 31,200 30,900 Number of customers 135,800 132,200 Number of customers 100,900 98,600

Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures 49 Länsförsäkring Länsförsäkringar Länsförsäkringar Kronoberg Kalmar län Blekinge President: Beatrice Kämpe Nikolausson President: Anna Blom President: Jens Listerö Board Chairman: Per-Åke Holgersson Board Chairman: Jan-Olof Thorstensson Board Chairman: Bengt Mattsson

Key figures 2017 2016 Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before Operating profit before -bonuses and discounts, SEK M 217 168 -bonuses and discounts, SEK M 338 291 -bonuses and discounts, SEK M 154 118 Total assets, SEK M 2,872 2,602 Total assets, SEK M 4,472 4,071 Total assets, SEK M 2,172 1,953 Solvency ratio, % 206 179 Solvency ratio, % 210 217 Solvency ratio, % 219 219 Number of employees 95 91 Number of employees 173 160 Number of employees 69 68 Number of branches 3 3 Number of branches 7 7 Number of branches 4 4 Bank Bank Bank Deposits, SEK M 2,511 2,375 Deposits, SEK M 3,178 2,866 Deposits, SEK M 1,765 1,593 Loans, SEK M 1,325 1,201 Loans, SEK M 1,351 1,256 Loans, SEK M 1,054 956 Retail mortgages, SEK M 3,461 2,880 Retail mortgages, SEK M 4,822 3,904 Retail mortgages, SEK M 3,264 2,766 Fund volumes managed, SEK M 820 622 Fund volumes managed, SEK M 1,118 826 Fund volumes managed, SEK M 637 504 Number of customers 26,400 25,800 Number of customers 24,300 22,200 Number of customers 15,300 14,100 Life assurance Life assurance Life assurance Premium income, SEK M 184 160 Premium income, SEK M 134 130 Premium income, SEK M 140 128 Total insurance capital, SEK M 4,034 3,830 Total insurance capital, SEK M 4,258 4,135 Total insurance capital, SEK M 2,839 2,678 Number of customers 21,700 21,800 Number of customers 27,400 27,600 Number of customers 17,400 17,500 Non-life insurance Non-life insurance Non-life insurance Premiums earned, SEK M 503 453 Premiums earned, SEK M 765 720 Premiums earned, SEK M 333 310 Technical result for insu-rance Technical result for insu-rance Technical result for insu-rance operations, SEK M 49 28 operations, SEK M 60 68 operations, SEK M 25 –8 Bonuses and discounts to the Bonuses and discounts to the Bonuses and discounts to the customers, SEK M 60 – customers, SEK M 59 61 customers, SEK M 40 50 Combined ratio after ce-ded Combined ratio after ce-ded Combined ratio after ce-ded reinsurance, % 90 93 reinsurance, % 97 96 reinsurance, % 93 105 Total return on asset Total return on asset Total return on asset -management, % 8 8 -management, % 9 8 -management, % 10 10 Number of customers 75,800 72,000 Number of customers 112,600 110,800 Number of customers 57,600 56,200

50 Länsförsäkringar Alliance in figures Länsförsäkringar Alliance 2017 Länsförsäkringar Länsförsäkringar Göinge-Kristianstad Skåne President: Niklas Larsson President: Susanne Petersson Board Chairman: Göran Trobro Board Chairman: Otto Ramel

Key figures 2017 2016 Key figures 2017 2016 Operating profit before Operating profit before -bonuses and discounts, SEK M 278 248 -bonuses and discounts, SEK M 1,167 711 Total assets, SEK M 3,632 3,334 Total assets, SEK M 11,986 10,678 Solvency ratio, % 248 251 Solvency ratio, % 197 218 Number of employees 104 100 Number of employees 509 474 Number of branches 3 3 Number of branches 8 8 Bank Bank Deposits, SEK M 2,461 2,340 Deposits, SEK M 7,999 7,054 Loans, SEK M 1,922 1,874 Loans, SEK M 4,590 4,143 Retail mortgages, SEK M 3,309 2,875 Retail mortgages, SEK M 19,856 15,955 Fund volumes managed, SEK M 814 564 Fund volumes managed, SEK M 2,676 1,957 Number of customers 19,300 18,100 Number of customers 81,900 74,600 Life assurance Life assurance Premium income, SEK M 138 130 Premium income, SEK M 983 986 Total insurance capital, SEK M 3,627 3,496 Total insurance capital, SEK M 21,426 20,490 Number of customers 23,800 24,000 Number of customers 118,700 118,300 Non-life insurance Non-life insurance Premiums earned, SEK M 500 461 Premiums earned, SEK M 2,206 2,060 Technical result for insu-rance Technical result for insu-rance operations, SEK M 53 24 operations, SEK M 211 75 Bonuses and discounts to the Bonuses and discounts to the customers, SEK M 92 – customers, SEK M 200 – Combined ratio after ce-ded Combined ratio after ce-ded reinsurance, % 90 97 reinsurance, % 91 99 Total return on asset Total return on asset -management, % 8 9 -management, % 11 9 Number of customers 79,500 77,600 Number of customers 369,200 361,000

Länsförsäkringar Alliance 2017 Länsförsäkringar Alliance in figures 51 Organisation and facts Länsförsäkringar AB

Länsförsäkringar AB is wholly owned by the regional insurance com- markets. In addition to the Parent Company, Länsförsäkringar AB, panies, together with 16 local insurance companies. Through its dis- the Group consists of Länsförsäkringar Sak, Länsförsäkringar Bank, tinct role in the Länsförsäkringar Alliance’s value chain, Länsförsäk- Länsförsäkringar Fondliv, Länsförsäkringar Liv and the subsidiaries of ringar AB contributes to increasing competitiveness and reducing these companies. Länsförsäkringar Liv and its subsidiaries are not costs for joint development. In turn, this creates possibilities for the consolidated in the consolidated financial statements since the com- regional insurance companies to be successful in their respective pany is operated according to mutual principles.

3.8 million customers

23 local regional insurance companies

Länsförsäkringar AB

Shareholdings in Länsförsäkringar AB on 31 December 2017

Number of shares

Share of Company A B C equity, % Länsförsäkringar Skåne 141,849 882,046 – 9.8 Länsförsäkringar Stockholm 129,212 802,382 – 8.9 Länsförsäkringar Östgöta 114,155 663,463 – 7.5 Dalarnas Försäkringsbolag 104,708 609,639 – 6.9 Länsförsäkringar Göteborg och Bohuslän 87,010 605,143 821 6.6 Länsförsäkringar Älvsborg 100,176 581,374 – 6.5 Länsförsäkringar Bergslagen 86,351 495,089 – 5.6 Länsförsäkringar Jönköping 82,812 474,021 – 5.3 Länsförsäkringar Uppsala 73,298 424,791 – 4.8 Länsförsäkringar Västerbotten 57,195 330,919 – 3.7 Länsförsäkringar Halland 56,785 329,857 – 3.7 Länsförsäkringar Södermanland 58,117 323,139 – 3.7 Länsförsäkringar Göinge-Kristianstad 49,982 322,347 – 3.6 Länsförsäkringar Kalmar län 56,717 295,878 – 3.4 Länsförsäkringar Gävleborg 60,058 281,083 – 3.3 Länsförsäkringar Skaraborg 64,058 253,172 – 3.0 Länsförsäkringar Västernorrland 50,186 257,122 – 2.9 Länsförsäkringar Jämtland 35,795 226,453 – 2.5 Länsförsäkring Kronoberg 36,701 203,130 – 2.3 Länsförsäkringar Värmland 31,160 202,208 – 2.2 Länsförsäkringar Norrbotten 16,960 127,878 – 1.4 Länsförsäkringar Blekinge 23,088 120,500 – 1.4 Länsförsäkringar Gotland 16,305 74,315 – 0.9 16 local insurance companies – – 5,134 0.0 Total number of shares 1,532,678 8,885,949 5,955 100.0

Share trend, Länsförsäkringar AB

SEK 2017 2016 2015 2014 2013 Equity per share on 31 December 2,269 2,046 1,858 1,675 1,557

52 About Länsförsäkringar AB Länsförsäkringar Alliance 2017 Definitions

Operating expenses in the insurance Consolidation ratio, life assurance Tier 1 ratio, bank operations The ratio between the market value of total net Tier 1 capital at year-end in relation to the closing Includes costs of marketing, sales and adminis- assets and the company’s total commitments to risk-weighted amount. tration in insurance operations. policyholders (guaranteed commitments and pre- liminarily distributed bonus) for the insurance pol- Return on equity Expense ratio, non-life insurance icies that carry bonus rights. Operating profit less standard tax at a rate of Operating expenses as a percentage of premiums 22.0% in relation to average equity adjusted for earned after ceded reinsurance. Solvency margin, non-life insurance capital contributions and Additional Tier 1 Capital Solvency capital as a percentage of premium loans. After ceded reinsurance income after ceded reinsurance. The proportion of an insurance transaction for Net interest income, bank which the insurance company assumes the risk, Solvency capital Interest income from loans to the public, credit and which is not reinsured with another company. The sum of equity, untaxed reserves, deferred tax institutions and income from interest-bearing Sometimes the term “for own account” is used. liabilities, subordinated debt as well as surplus securities less expenses for deposits and funding values on assets. from the public, credit institutions and expenses Claims payments for interest-bearing securities. The cost during the period for claims incurred, Loan losses net, bank including costs for claims that have not yet been Confirmed loan losses and reserves for loan Technical result for non-life insurance reported to the insurance company. The cost also losses less recoveries of receivables and net operations includes the run-off result. expense for the year for loan losses for guaran- Premiums earned less claims payments, claims tees and other contingent liabilities. adjustment costs and operating expenses in the Technical provisions insurance operations plus profit/loss from ceded Provision for unearned premiums and unexpired Loan losses in relation to loans, bank reinsurance and investment income transferred risks, life-assurance reserves and provision for Net loan losses in relation to the carrying amount from financial operations. claims outstanding and comparable commit- of loans to the public and to credit institutions. ments in accordance with signed insurance con- Claims ratio, non-life insurance tracts. For life assurance, this shall correspond to Investment margin, bank The ratio between claims payments, including the insurance company’s guaranteed insurance Net interest income in relation to average total claims adjustment costs and premiums earned commitments. assets. after ceded reinsurance.

Investment income, non-life insurance Investment assets Total return ratio The net of the following income and expense: Investment assets are current or long-term The sum of direct yield, realised gains and losses, interest income, interest expense, dividends on assets that take the form of an investment. This and unrealised changes in the value of assets in shares and participations, earnings from compa- includes real estate and securities in the case of relation to the average fair value of managed ny-owned property, change in the fair value of an insurance company. assets. shares, interest-bearing securities and deriva- tives, earnings from the sale of investment assets, Premium income Combined ratio, non-life insurance currency exchange gains and losses, and operat- Premiums paid in during the period or recognised The sum of operating expenses, claims payments ing expenses in asset management. as receivables at the end of the period since they and claims adjustment costs in relation to premi- have fallen due for payment. Premium income is a ums earned after ceded reinsurance. Investment income transferred common measure of the volume of insurance from financial operations operations. Reinsurance Premiums are paid in advance, while operating If an insurance company cannot, or does not wish expenses and claims costs are paid in arrears. Premiums earned to, assume the entire liability to policyholders, it Funds that have not yet been paid out are invested The proportion of premium income attributable to reinsures part of its underwritten policies with in order to obtain a return. The estimated interest the period. other companies. In this connection, the reinsur- on these investments – the cost of capital – is ance is said to be “ceded” by the first company and transferred from investment income to the insur- Tier 1 capital, bank “assumed” by the second company. ance operations. Tier 1 capital is part of own funds and comprises equity and Additional Tier 1 instruments. Deduc- Solvency ratio tions are made for such items as deferred tax Own funds in relation to the solvency capital assets, goodwill and other intangible assets, requirement, according to the Solvency II Direc- investments in financial companies and the differ- tive in Swedish law. ence between expected losses and reserves established for probable loan losses. Cost/income ratio, bank Total expenses in relation to total income. The cost/income ratio is calculated before and after loan losses.

Länsförsäkringar Alliance 2017 Definitions 53 Financial calendar 2018

First quarter: Interim report January-March 2018, Länsförsäkringar Bank 25 April Interim report January-March 2018, Länsförsäkringar Hypotek 25 April

Second quarter: Interim report January-June 2018, Länsförsäkringar Bank 19 July Interim report January-June 2018, Länsförsäkringar Hypotek 19 July Interim report January-June 2018, Länsförsäkringar Alliance 29 August

Third quarter: Interim report January-September 2018, Länsförsäkringar Bank 25 October Interim report January-September 2018, Länsförsäkringar Hypotek 25 October

54 Financial calendar Länsförsäkringar Alliance 2017 Addresses

Länsförsäkringar Norrbotten Länsförsäkringar Stockholm Länsförsäkring Kronoberg Länsförsäkringar Bank Box 937 SE-169 97 Solna Box 1503 SE-106 50 Stockholm SE-971 28 Luleå Visit: Telegrafgatan 8A SE-351 15 Växjö Visit: Tegeluddsvägen 11–13 Visit: Köpmantorget Tel: +46 8-562 830 00 Visit: Kronobergsgatan 10 Tel: +46 8-588 400 00 Tel: +46 920-24 25 00 E-mail: [email protected] Tel: +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 Tel: +46 8-588 400 00 Visit: Nygatan 19 Tel: +46 155-48 40 00 Visit: Norra Långgatan 17 E-mail: [email protected] Tel: +46 90-10 90 00 E-mail: [email protected] Tel: +46 20-66 11 00 E-mail: [email protected] E-mail: [email protected] Länsförsäkringar Fondförvaltning Länsförsäkringar Göteborg SE-106 50 Stockholm Länsförsäkringar Jämtland och Bohuslän Länsförsäkringar Blekinge Visit: Tegeluddsvägen 11–13 Box 367 SE-404 84 Gothenburg Box 24 Tel: +46 8-588 400 00 SE-831 25 Östersund Visit: Lilla Bommen 8 SE-374 21 Karlshamn E-mail: [email protected] Visit: Prästgatan 18 Tel: +46 31-63 80 00 Visit: Drottninggatan 56 Tel: +46 63-19 33 00 E-mail: [email protected] Tel: +46 454-30 23 00 Wasa Kredit E-mail: [email protected] E-mail: [email protected] Box 6740 Länsförsäkringar Skaraborg SE-113 85 Stockholm Länsförsäkringar Västernorrland Box 600 Länsförsäkringar Göinge- Visit: Tegeluddsvägen 11–13 Box 164 SE-541 29 Skövde Kristianstad Tel: +46 8-635 38 00 SE-871 24 Härnösand Visit: Rådhusgatan 8 Box 133 E-mail: [email protected] Visit: Köpmangatan 13 Tel: +46 500-77 70 00 SE-291 22 Kristianstad Tel: +46 611-36 53 00 E-mail: [email protected] Visit: Tivoligatan 6 Agria Djurförsäkring E-mail: [email protected] Tel: +46 44-19 62 00 Box 70306 Länsförsäkringar Östgöta E-mail: info.goinge-kristianstad@ SE-107 23 Stockholm, Länsförsäkringar Gävleborg Box 400 lansforsakringar.se Visit: Tegeluddsvägen 11–13 Box 206 SE-581 04 Linköping Tel: +46 8-588 421 00 SE-801 03 Gävle Visit: Platensgatan 11 Länsförsäkringar Skåne E-mail: [email protected] Visit: Drottninggatan 35 Tel: +46 13-29 00 00 Box 742 Tel: +46 26-14 75 00 E-mail: [email protected] SE-251 07 Helsingborg Länsförsäkringar E-mail: [email protected] Visit: Södergatan 15 Fastighetsförmedling Länsförsäkringar Älvsborg Tel: +46 42-633 80 00 Box 518 Dalarnas Försäkringsbolag Box 1107 E-mail: [email protected] SE-101 30 Stockholm Box 3 SE-462 28 Vänersborg Visit: Tegeluddsvägen 21 SE-791 21 Falun Visit: Vallgatan 21 JOINT COMPANIES Tel: +46 10-219 54 00 Visit: Slaggatan 9 Tel: +46 521-27 30 00 E-mail: [email protected] Tel: +46 23-930 00 E-mail: [email protected] Länsförsäkringar AB E-mail: [email protected] SE-106 50 Stockholm Länsförsäkringar Mäklarservice Länsförsäkringar Gotland Visit: Tegeluddsvägen 11–13 Box 27120 Länsförsäkringar Värmland Box 1224 Tel: +46 8-588 400 00 SE-102 52 Stockholm Box 367 SE-621 23 Visby E-mail: [email protected] Visit: Tegeluddsvägen 21 SE-651 09 Karlstad Visit: Österväg 17 Tel: +46 8-588 490 00 Visit: Köpmannagatan 2 A Tel: +46 498-28 18 50 Länsförsäkringar Liv E-mail: Tel: +46 54-775 15 00 E-mail: [email protected] SE-106 50 Stockholm [email protected] E-mail: [email protected] Visit: Tegeluddsvägen 11–13 Länsförsäkringar Jönköping Tel: +46 8-588 400 00 Humlegården Fastigheter Länsförsäkringar Uppsala Box 623 E-mail: [email protected] Box 5182 Box 2147 SE-551 18 Jönköping SE-114 34 Stockholm SE-750 02 Uppsala Visit: Barnarpsgatan 22 Länsförsäkringar Fondliv Visit: Engelbrektsplan 1 Visit: Fyrisborgsgatan 4 Tel: +46 36-19 90 00 SE-106 50 Stockholm Tel: +46 8-678 92 00 Tel: +46 18-68 55 00 E-mail: [email protected] Visit: Tegeluddsvägen 11–13 E-mail: [email protected] E-mail: [email protected] Tel: +46 8-588 400 00 Länsförsäkringar Halland E-mail: [email protected] Länsförsäkringar Bergslagen Box 518 Box 1046 SE-301 80 Halmstad Länsförsäkringar Sak SE-721 26 Västerås Visit: Strandgatan 10 SE-106 50 Stockholm Visit: Stora Gatan 41 Tel: +46 35-15 10 00 Visit: Tegeluddsvägen 11–13 Tel: +46 21-19 01 00 E-mail: [email protected] Tel: +46 8-588 400 00 E-mail: [email protected] E-mail: [email protected]

Länsförsäkringar Alliance 2017 Addresses 55 56 Länsförsäkringar Alliance 2017 Production: Länsförsäkringar AB in cooperation with Intellecta. Photos: Länsförsäkringar’s image bank, Jimmy Eriksson. Print: GöteborgsTryckeriet. We print on environmentally friendly paper. LFAB 03406 Utg 19