Handelsbanken Liv's financial results for 2003: Best yield in the Swedish insurance sector
Handelsbanken Liv's policyholders received the best yield in the Swedish insurance sector in 2003.
Handelsbanken Liv's total yield for the whole of 2003 was 6.27 percent. This means that customers' assets will increase by 5.64 percent - 90 percent of the total yield.
The bonus rate paid by other Swedish life insurance companies was between 0 and 3.25 percent for the whole year*.
"This proves that our demutualised model benefits policyholders in both good times and bad. Although we will probably not have the best total yield, our policyholders will still earn more on their assets than all the rest," says Stefan Nilsson, head of Handelsbanken Pension & Insurance.
The other traditional life insurance companies are run on mutual principles which means that the policyholders alone must bear all deficits.
"This means that despite the rise on the equity market, they must take a large part of the yield to fill the deficits which arose during the stock market fall."
But in the case of demutualised Handelsbanken Liv, it is the company which will be responsible for these deficits:
"In 2002, Handelsbanken Liv paid SEK 103 million of the deficit arising on customers' insurance policies. We also covered the deficit in the operating and risk result by another SEK 90 million. If we had been a mutual company, the policyholders would have had to defray this deficit themselves."
"In our model, the policyholders always receive at least 90 percent of the total yield. Mutual companies say that 'everything goes back to the policyholders' but this is not quite true. Individual policyholders seldom receive more than 90 percent of the yield on their capital in mutual life insurance companies. This year it will be far less: say that a company has ten percent in total yield and a bonus rate of one percent. In this case policyholders has to make do with ten percent of their yield, the company uses the remainder for the deficits."
At Handelsbanken Liv, the figures are reversed: 90 percent to the customer, 10 percent to the company. In kronor terms this means that the policyholders received SEK 1 033 million, while the company received SEK 115 million.
In the past year, Handelsbanken Liv increased the proportion of equities and reduced the proportion of fixed income securities. The investments were allocated as follows as at 31 December 2003:
Equities: 22 percent
Fixed income assets: 69 percent
Property: 7 percent
Other: 2 percent
The policyholders will be able to read all this in the statement which is being distributed to them at present. This is still the only insurance value statement on the Swedish market which offers policyholders in a traditional life insurance company full insight into how their assets have performed during the year.
* Source: Nyhetsbrevet Risk&Försäkring (Risk & Insurance Newsletter)
The press release can be downloaded from the following link:
For questions, please contact: <!-- hugin-supplied --><br> <!-- hugin-supplied --><br> Stefan Nilsson, Head of Handelsbanken Pension & Insurance, +46 8 - 613 20 00 <!-- hugin-supplied --><br> Johan Lagerström, Head of Corporate Communications Handelsbanken Liv, +46 8 - 613 22 42, <!-- hugin-supplied --><br> Mobile: +46 70 - 265 80 14