The Alecta Group 2001: Stable solvency and high premium income

The Alecta Group 2001: Stable solvency and high premium income * The collective solvency reserve amounted to SEK 60.8 bn (2000: 71.9) at 31 December 2001. The collective solvency margin remained high at 124 per cent (127). * The loss for the year after tax amounted to SEK 4.4 bn (profit 3.2). This decline in earnings was mainly due to a SEK 20.5 bn decrease in investment return, primarily caused by major falls on the stock markets. * Total return on investments amounted to -1.0 per cent (5.4). The market value of investments at 31 December amounted to SEK 334.2 bn (353.3), a decrease of SEK 19.1 bn during the year. Investments were made in Swedish equities while net sales were made of fixed-income securities and real estate. * Premiums written rose by 15 per cent compared with 2000 and amounted to SEK 19.1 bn (16.6). The main increase was in regular premiums, up 23 per cent. * Operating expenses in the insurance business amounted to SEK 549 m (565). The expense ratio for the year amounted to 2.9 per cent (3.4) and the management expense ratio was 0.21 per cent (0.20). President's comments Alecta stands firm in uncertain times The year was characterised by general economic unease which led to real declines in several countries and sectors. Market values of financial assets fell, with major fluctuations. Public confidence in the financial systems declined and many people adopted a more pessimistic future outlook. Towards the end of the year we could see a, possibly temporary, upturn in these respects. In 2001, Alecta completed the sales of SPP Liv, SPP Fonder and the SPP brand decided by the Board in spring 2000. In my view, the sold companies went to good owners which are well equipped to further develop the companies they have acquired. Since these divestments were made, Alecta has been a pure-play occupational pensions company that only works with collective occupational pension plans and investment management for these pension plans. We manage larger pension assets than any other Nordic institution and we only have one product: the ITP Plan. The ITP Plan is standardised and therefore suitable for large-scale application. A standard product in large volumes leads to high quality at low costs. Other life insurance companies have other strategies and develop customised solutions, mainly to meet high earners' wishes for product differentiation. Everyone knows that customised products are more expensive than standardised ones. Somewhere in the system this cost has to be met. The question of the level of risk which is suitable for pension assets is important to Alecta. Unit-linked insurance's share of insurance savings fell sharply in 2001 which indicates a greater reluctance among individuals to make risk assessments themselves. The company's investment return in 2001 as well was among the highest in the industry. Alecta's solvency level is good and considerably higher than that of all the other Swedish life insurance companies. Alecta can therefore offer companies and insured considerable financial security. This security will naturally continue to apply even if the ITP assignment that may be given to us by the Confederation of Swedish Enterprise and PTK has a different content from at present. We are concentrating on making Alecta a company which is reliable, straight-forward and efficient in every respect. Alecta must be the best alternative for the present ITP plan and an unbeatable manager of a new plan. From 1 January 2002, Alecta is reducing premiums by 15 per cent on parts of the ITP Plan. In this way our good return and cost-effective operations will benefit Alecta's client companies. Lars Otterbeck, President of Alecta For further information, please contact: Lars Otterbeck, President,+46 8 441 60 50, +46 70 510 00 36 Kerstin Stenberg, Senior Vice President, Finance & Administration +46 8 441 61 40, +46 70 581 61 40 Cecilia Schön Jansson, Senior Vice President, Communications, +46 8 441 93 50, +46 70 526 93 50 Alecta Group and Alecta (Parent Company), Summary Profit and Loss Account and Balance Sheet Profit and Loss Alecta Group Alecta (Parent Account Company) SEK m 2001 2000 2001 2000 Premiums written 19,146 16,608 19,146 16,608 Investment income -3,880 16,602 -3,302 15,605 Claims incurred -9,956 -7,999 -9,956 -7,999 Change in other technical provisions -13,126 -18,801 -13,126 ,-18,801 Operating expenses -549 -565 -549 -565 Other -24 - -24 - Balance on the technical account, -8,389 5,845 -7,811 4,848 life insurance business NON-TECHNICAL ACCOUNT Balance on the -8,389 5,845 -7,811 4,848 technical account, life insurance business Other 6,892 -44 6,661 131 Tax on result for -2,889 -2,636 -2,674 -2,600 the year Net loss/profit for -4,386 3,165 -3,824 2,379 the year Balance Sheet Alecta Group Alecta (Parent Company) SEK m 2001 2000 2001 2000 Investments 331,153 350,235 330,226 348,921 Other assets 10,576 10,880 9,521 9,808 Total assets 341,729 361,115 339,747 358,729 Untaxed reserves - - 501 501 Bonus funds 120,683 155,880 118,866 153,791 Technical provisions 214,826 198,757 214,826 198,757 Other liabilities 6,220 6,478 5,554 5,680 Total shareholders' equity, 341,729 361,115 339,747 358,729 provisions and liabilities Investment Income Alecta Market Net Change in value Market value Total return value invest 31 Dec 2001 % 31 Dec 31 Dec 2000 2001 SEK % SEK bn SEK bn % SEK bn % 2001 2000 bn Fixed- 167.5 47.4% -6.2 -1.4 -0.9% 159.8 47.8% 4.6% 9.2% income excl. direct loans Swedish 119.8 33.9% -3.1 -1.8 -1.6% 114.8 34.4% 4.0% 8.4% Foreign 47.7 13.5% -3.1 0.4 1.0% 45.0 13.4% 6.4% 11.2% Direct 4.4 1.2% -2.5 0.0 0.0% 2.0 0.6% 6.7% 7.1% loans Equities 146.5 41.5% 14.0 -17.9 -11.7% 142.6 42.7% -9.8% -1.9% Swedish 80.1 22.7% 13.0 -11.9 -13.7% 81.2 24.3% -11.6% -3.0% Foreign 66.4 18.8% 1.0 -6.0 -9.0% 61.4 18.4% -7.5% -0.6% Real 34.9 9.9% -7.1 2.0 6.4% 29.8 8.9% 13.2% 19.4% estate 0.0 0.0% 0.0 0.0 0.0% 0.0 0.0% -5.7% 5.5% Borrowin g for investme nts Total 353.3 100.0% -1.8 -17.3 -5.0% 334.2 100.0% -1.0% 5.4% investme nts ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/03/07/20020307BIT00720/wkr0001.doc http://www.waymaker.net/bitonline/2002/03/07/20020307BIT00720/wkr0002.pdf