Handelsbanken: The Bank's insurance operations
Handelsbanken held a meeting with analysts today to present the insurance operations of the Handelsbanken Group. The meeting was held in reference to Handelsbanken's acquisition this year of SPP, one of Sweden's leading companies in the occupational pension field, and the planned demutualisation of Handelsbanken Liv at year-end. There was a detailed presentation of how Handelsbanken Liv, as a demutualised company consolidated within the Handelsbanken Group, would affect the Bank's result, balance sheet and key figures. An overall assessment was also presented of the effects of the reorganisation of SPP from a company run on mutual principles to a company paying out profits. In addition, the Bank updated the estimates presented at the time of the SPP acquisition. The advantages of the demutualisation for Handelsbanken Liv's customers were discussed only briefly. The company communicated directly with all affected policyholders in connection with voting on the issue last autumn and it is currently again in communication with all customers.
Calculations of the financial consequences of a demutualisation of Handelsbanken Liv were presented for 1999, 2000 and up to 30 September 2001. In 1999, the Bank's operating profit would have been affected positively by SEK 308m, while for the other two years it would have been affected negatively by SEK 114m and SEK 109m, respectively. The return on shareholders' equity would have been 0.7 percentage points higher in 1999, while the decreases in 2000 and 2001 would have represented 0.5 and 0.4 percentage points, respectively. The cost/income ratio would have changed by less than one percentage point for each year. Earnings per share would have increased by SEK 0.43 in 1999 and decreased by SEK 0.16 in both 2000 and 2001 (through 30 September). The effect on the group's balance sheet would have been marginal. An assessment of all the effects that Handelsbanken Liv has on the Bank should also take into account the unit linked operation, fees for asset management and other commissions.
At the time of the acquisition of SPP, the Bank made it clear that its intention was to demutualise the company. The Bank stated that this could be carried out in 2004 at the earliest. Today, a rough overall assessment was presented of how SPP would have performed in 1999 and 2000 if it had been demutualised. This assessment relied primarily on the same conditions used for Handelsbanken Liv's portfolio with the result that SPP would have had a surplus of just over SEK 1.1bn in 1999, while in 2000 it would have shown a loss of approximately SEK 30m. It should be noted that this would not have had an equivalent effect on the group.
Finally, new estimates for the SPP acquisition were presented. Certain items in the estimate have been revised, which, however, do not appreciably change the picture of the acquisition's financial consequences for SHB.
The material presented today is available on the Bank's website, http://www.handelsbanken.se/ireng.
For further information, please contact: <br>Lennart Francke, Head of Central Control and Accounting, tel: +46 8 701 4360 <br>Bengt Ragnå, Head of Investor Relations, tel: +46 8 701 1216 <br>Barbro Johansson, Head of Handelsbanken Liv, tel: +46 8 613 2284 <br>Anders Östryd, Head of SPP, tel: +46 8 550 45487