INTERIM REPORT For the period March - September 1999

· Operating result MSEK 476
· Total combined ratio for the period 113 per cent
· Launch of new brand name - if...
· Financial Strength rating "A" indicated by Standard & Poor´s
· Vesta Insurance´s Marine & Energy business to if...
· Exclusive negotiations on strategic global co-operation with the GARD Protection and Indemnity Insurer in Marine & Energy

"The launch of the brand name in Copenhagen on 18 October 1999 was a key event in the establishment of if.... We are now keen to start our marketing efforts in the four Nordic countries as soon as we have received the necessary regulatory approvals in Norway and Finland. The key attributes of our brand and market offering will be forward-looking, reliable, engaged and easy to relate to. We will strive to make these core values visible in every contact between us and our customers.

The creation of if... is proceeding swiftly according to plan and with great commitment from our employees. Integrating four national cultures and defining the channel driven business area organisation have gone very well. All members of executive management as well as management teams for each business area have been named and are now in place. As of 1 November we are ready to start operations in the new Nordic organisation, subject to regulatory approval. It is my sincere hope that all approvals are given this year so that we can start the year 2000 as the new organisation with its legal framework in place.

The if... combined ratio is somewhat lower in September compared to June, mainly as a result of an improving expense ratio. The expense ratio was 23 per cent during the third quarter.

if... is focusing exclusively on the Nordic property & casualty market with the exception of Marine & Energy, where we will be a global niche provider drawing on the expertise and long tradition within both Storebrand and Vesta. Bringing the Marine & Energy business of Vesta into if... and the potential co-operation agreement with GARD will give us additional strength in this area.

I am particularly pleased that today we have received indication of a financial strength rating of "A" from Standard & Poor´s, provided that we receive the necessary regulatory approvals to form if…. This will be of great value to our business relationships, especially with industrial clients and within Marine & Energy."

if... in brief

if... will be the pre-eminent property & casualty insurance company in the Nordic area with an overall market share of around 20 per cent and some 3 million customers.

In 1998, if... had pro forma gross written premiums of SEK 23 billion and a combined ratio of 108 per cent. The company will start its operations with some 5,600 employees.

Pohjola will own 25 per cent of if..., Skandia 42 per cent and Storebrand 33 per cent. Voting rights will be equal for each party at 33 per cent.

if... will be preparing for an Initial Public Offering (IPO) no later than during 2001, market conditions permitting.

Key events in the formation of if... during 1999

22 February - Skandia and Storebrand announce their intention to merge their respective property & casualty businesses into a new company. The new company or "Newco" is to have a Nordic strategy and will focus exclusively on property & casualty insurance.

23 June - Pohjola announce that they will contribute all of their property & casualty business to "Newco".

18 August - the commission of the European Communities confirms that the creation of "Newco" does not raise doubts as to its compatibility with the common market and the EEA agreement, subject to divestment of Vesta Insurance´s property & casualty operations with the exception of Marine & Energy.

1 September - 35 senior managers in the four Business Areas and in group functions are appointed.

14 September - the Norwegian Banking, Insurance and Securities Commission recommended the Norwegian Ministry of Finance to grant Storebrand permission to transfer its property & casualty insurance business to "Newco".

18 October - the if... brand name is announced. if... is simple, unique, descriptive and international, and has equal meaning and pronunciation in the four Nordic countries.

25 October - if... agreed to examine establishing a jointly owned management company within Marine & Energy together with the Protection and Indemnity provider Assuranseforeningen GARD gjensidige.


if...will focus exclusively on property & casualty insurance in the Nordic area except for Marine & Energy, where if... will aim at being a leading global niche provider.

if... will offer and develop superior customer services and product offerings at competitive prices.

if... expects to achieve annual cost synergies of at least MSEK 540 within 3 years from completion, as well as substantial revenue synergies from implementing best practices from across the three initial organisations. Cost synergies will be realised by integrating production systems, product development, marketing and support functions across the Nordic countries. These synergies will enable if... to be competitive in the mature Nordic property & casualty market.

if... will operate entirely as a channel driven organisation across the four Nordic countries. The Business Areas have been defined as Private, Commercial, Industrial and Marine & Energy. Business Area Managers will have complete responsibility for their results across the countries. Country heads outside the Business Areas will not be appointed. The Business Areas will establish centres of excellence in various Nordic cities.

if... sees great potential in integrating the use of IT across the business, not least in relation to improving the quality and efficiency of customer relationship management and in claims handling. Efficient use of IT will provide if... with a competitive edge.

if... will implement a clear-cut and diversified investment policy supporting predictable investment returns. The management of investment assets will be outsourced to professional asset managers.

if...will reengineer distribution channels and focus heavily on Internet opportunities.

if... will focus on gross underwriting performance. Reinsurance will mainly be used as a capital management tool.

if...will be prudently but efficiently capitalised. Capital efficiency is supported by the pooling of unrelated direct insurance risks in the four countries. Any excess solvency capital will be returned to the shareholders.

if... will continuously review which level of target solvency that is appropriate. The target solvency is currently 58%.

if... will target a return on solvency capital corresponding to the ten-year Swedish government bond yield plus six percentage points. Currently this implies a medium-term target combined ratio of 105%.

The Nordic Property & Casualty Market

The structure and landscape of the European financial services sector is undergoing rapid change. Regulatory harmonisation, new technology and alternative distribution channels contribute to the ongoing shift from national to regional markets. The Nordic countries have come far in this process. Looking forward, an integrated European financial services market is likely to emerge.

The commercial and industrial markets in Sweden are characterised by high pressure on premium rates. The companies´ market shares within commercial and real estate, which is the largest commercial business line in the industry statistics, have during the first three quarters remained roughly the same. Within Private lines, the claims levels within the motor business are still high. A number of companies have during the first three quarters initiated increases in premium rates.

The Norwegian market is very competitive. The market is characterised by generally low premium levels. However, possibilities of raising premium rates have led to an increase in premium volumes in private and commercial business.

In Finland, premiums written in property & casualty insurance have grown faster than expected in 1999. The trend in premiums written for statutory workers' compensation insurance has been better than forecasted, car sales have increased and there has been a major growth in construction. The Finnish property & casualty insurance is expected to grow by 4% in 1999, according to the estimate of the Federation of Finnish Insurance Companies.

In Denmark, the brokered business within commercial and industrial lines is increasing its share of the total market. Premium rates are in general low due to high price competition. Within Private lines, the competition remains very sharp in a fragmented market structure.

The development in the Marine & Energy market has continued to be negative in terms of low premium rates and high claims levels. In this international market place, companies tend in some case to prefer a reduction in business volume to discounting the business risk.

Group results

Group results include the if... operations from Skandia and Storebrand from 1 March to 30 September and the if... operations from Pohjola from 1 July to 30 September.

Premiums earned were MSEK 10,186 for the period. The technical result before investment income was MSEK -1,330. The investment return was MSEK 1,650. The operating result was MSEK 476, of which Vesta accounted for MSEK 156.

The combined ratio for the period was 113 per cent. The claims ratio was 88 per cent and the expense ratio was 25 per cent.

On a pro forma basis, from 1 January to 30 September, including the if... operations from Skandia, Storebrand and Pohjola, premiums earned were MSEK 14,972. The combined ratio was 114 per cent. The claims ratio was 89 per cent and the expense ratio was 25 per cent.

Recent developments in Marine & Energy

Assuranceforeningen GARD, a world leading Protection and Indemnity Insurer in the Marine market, and if... announced on 25 October that together we will examine the possible benefits of forming a jointly owned management company, through which the operations of the if... Business Area Marine & Energy and of GARD would be managed. Both companies would continue underwriting the business. In this context, the Vesta Marine & Energy business will be transferred to if...and will thus not be a part of the sale of Vesta. On a proforma basis including this business, if... Marine & Energy 1998 had gross earned premiums of MSEK 1,500.

If the examination leads to the creation of a joint management company, it would result in the emergence of a global leader for a broad range of products and services in the Marine market. A joint management company should create economies of scale previously not available in the Marine market.

Stockholm, Sweden, 27 October 1999
Bo Ingemarson
President and CEO

This interim report has not been reviewed by the company´s auditors.

Glossary of terms (all terms net)

Claims ratio: claims incurred as a percentage of premiums earned.

Expense ratio: operating expenses as a percentage of premiums earned.

Combined ratio: claims incurred and operating expenses as a percentage of premiums earned.

Next report

1999 full-year figures for if... will be published on 16 February, 2000.

Information on Internet

Q3 Report and Powerpoint presentation are available on, under Investor Relations.

The full report including tables can be downloaded from the enclosed link.

For questions, please call: <br> <br>Bo Ingemarson, CEO, tel. +46-8-788 45 77 <br>Tom Rathke, CFO, tel. +46-8-788 32 25 <br>Nils Henriksson, Investor Relations, tel. +46-8-788 13 82 <br> <br>if… IR e-mail: <br>


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