The Folksam Group Interim Report January – June 2018
Continued focus on our customer offering
We are continuing our intensive work in further developing our customer offer. Work with the new regulations continues as planned.
The Folksam Group’s total premium volume in the first six months of the year amounted to SEK 34,641 million (33,211). The primary growth continues to come from collectively agreed occupational pensions, and above all, the subsidiary KPA Pension. Within the non-life insurance business, the premiums earned were in line with last year. Total return for our companies was slightly higher than the levels the year before, mainly as a result of higher return on the equities portfolios. During the period, we made several investments that stand out. In February, we made our third bond investment of USD 350 million in a bond issued by a body in the World Bank. This time, it did not involve green bonds, but through the acquisition, we want to highlight the UN’s 17
Global Sustainable Development Goals and direct focus on five of them. We made the second investment in April. For a value of USD 400 million, or more than SEK 3 billion, we bought green bonds issued by the European Investment Bank. This will be the Folksam Group’s biggest single acquisition. This means that we surpassed SEK 20 billion in this asset class and are close to reaching our target of owning at least SEK 25 billion before the end of 2018. It feels good.
The global economic development is strong and the International Monetary Fund’s GDP forecasts of nearly 4 per cent growth for both 2018 and 2019 stand fast. The developed countries in Europe and Asia, like the U.S., have a stable economic development, even if the world is still facing many politically difficult challenges.
Within the Folksam Group, we have had continued focus on development. Not least on how we meet our customers, but also on efficiency improvements. Although quite a bit is happening continuously, we have shifted into a higher gear for the next few years. To create clearer responsibility for results, we have streamlined the organization to only encompass the business areas of Life and General, which we introduced as of 1 April 2018. In this way, we increase the pressure on efficiency improvement, which ultimately makes it possible for us to set lower premiums and better terms and conditions for our customers and owners. We also have a focus on sales, which we were not fully satisfied with in all areas. We want to achieve more stable sales over time with greater numbers of customers seeking us out as we can offer what they need – security. The launching of the new product Private Pension is part of this work. It is a traditional insurance mainly targeted at our more than one million customers aged 25 to 55 who currently have no savings.
All of this takes place in parallel with the deployment of the extensive and well-known regulations GDPR, PRIIP, IDD, MIFID and POG and IORP. In the beginning of July, the memorandum on the occupational pension regulations was distributed. The proposal means that insurance companies that conduct occupational pension operations can choose to leave insurance regulation and convert to occupational pension companies. As the main part of the operations of Folksam Life and its subsidiaries is in the occupational pension sector, the choice of corporate form will be of major strategic significance for Folksam. We will be analysing the proposal and following regulatory developments during the autumn in order to make a wise decision on future directions.
We still have a lot to do in front of us. It’s basically about increasing security for our customers. And in all of the challenges that we have ahead of us, we can find strength in the fact that the customers are satisfied with us and are staying ever longer. We are proud of this. And it gives us a clear vision of what we should continue to work towards.
Jens Henriksson
President and CEO