Interim Report for the period January-March 2002

INTERIM REPORT For the period January-March 2002*) * Sales totalled SEK 31 billion * The result of operations increased to SEK 860 million (804) * The operational return was 12%, which is unchanged compared with the full-year 2001 * The profit margin was 8.8%, which is an improvement compared with 7.8% for the fourth quarter of 2001 * The group's operating result was SEK 170 million (-2,543) * Funds under management increased by 4% during the last 12 months * Assets under management increased by 3% during the last 12 months * Borrowings down SEK 2.5 billion. Cash position strong *) Does not include Livförsäkringsaktiebolaget Skandia, which is run on a mutual basis. All return measurements for shareholders' equity and net asset value as per March 2002 pertain to moving twelve-month figures. All comparison figures pertain to March 2001 unless stated otherwise. Comments by Lars-Eric Petersson, President and CEO: The uncertain market situation we saw in 2001 has stabilized somewhat. However, in many of the world's savings markets, customers are still waiting on the sidelines. Although the financial markets have recovered from the low point following September 11, the recovery has been hesitant due to a number of coinciding economic and market factors. Naturally, Skandia is affected by the current market conditions, but despite this we see several good signs. Sales have been rising slightly in recent quarters, even though we still have a way to go before we achieve our long-term target levels. Funds under management - our revenue base - continue to increase. Our market shares in the strained US market are recovering, and our financial position is strengthening in accordance with our plans. In anticipation of clear signs of a market recovery, we continue to focus our business strategy in our core businesses. We are launching new products and strengthening our distribution capacity. Skandia's business model, combined with the underlying need in the market for increased long-term savings, creates conditions for favourable development in the future. OVERVIEW Despite lower sales volumes, the result of operations for the group increased by 7% during the first quarter, to SEK 860 million (804), and the operational return was 12%, which is unchanged compared with the full-year 2001. The operating result, which includes financial effects, was SEK 170 million (-2,543). Sales of unit linked assurance amounted to SEK 22.3 billion (25.8). New sales decreased by 19%. However, sales were higher than in the last two quarters. The result of operations for unit linked assurance increased by 9%, to SEK 955 million (877). The profit margin was 8.8%, which is an improvement compared with the last two quarters. Sales of mutual fund savings products decreased by 34%, to SEK 7.2 billion. Here, too, however, sales were higher compared with the preceding two quarters. Operations showed a negative result of SEK -58 million, which is attributable to investments in new markets and product development. Funds under management have increased by 4% during the last twelve months, to SEK 631.9 billion. The acquisition of Bankhall in the UK was carried out during the first quarter. This operation is included in the accounts as from 5 February 2002. It is expected that the awaited regulatory clearance that is required to complete the sale of Skandia Asset Management can be received during the second quarter of 2002. In 2001 the operational cash flow in the unit linked assurance operations was positive in the amount of SEK 1 billion, and for the group as a whole it was positive in the amount of SEK 0.1 billion. The underlying cash flow remained positive during the first quarter, and total borrowings decreased by SEK 2.5 billion. As previously announced, our goal - assuming all other factors are unchanged - is to reduce the group's borrowings by approximately SEK 5 billion during the first half of 2002. INSURANCE AND SAVINGS PRODUCTS Market and Sales Unit Linked Assurance Sales of unit linked assurance decreased by 14%. Sales have increased successively during the last two quarters. New sales decreased by 19% (new sales defined by the industry-wide definition as periodic premiums recalculated to full-year figures plus 1/10 of single premiums during the period). Sales in the USA decreased by 26% in local currency. Following weak market conditions in the last two years, sales have stabilized since the third quarter of 2001. Skandia is the market leader in the independent broker distribution channel. According to preliminary estimates, Skandia continued to improve its total market position during the first quarter as a result of continued renewal of its product offering. The focus on the core variable annuity and mutual fund products entails a considerable increase in Skandia's distribution capacity in the independent brokers segment. In the British operation, sales decreased by 20% in local currency. New sales decreased by 21%. The sales decline is mainly attributable to the offshore market and single-premium products, while sales of products with annual premium continued to rise. Sales in Sweden decreased by 7%. Skandia is the market leader and has a balanced product portfolio. New sales decreased by 21%, mainly due to the impact of individual contracts during the preceding year. In Germany, sales increased by 20% in local currency. The product portfolio built up by Skandia is now contributing to stable sales growth. In Japan, sales increased by 300% in local currency. The increase is attributable to new distribution agreements, which are now having an impact on sales. Funds under management increased during the last twelve months by 4% to SEK 499 billion. Net flows were positive during the first quarter, while the strengthening of the Swedish krona had a slight negative impact on asset values. Payments to policyholders, expressed as a percentage of assets under management, amounted to 10.5% on a moving 12-month basis (9.8% at year-end 2001). Surrenders accounted for 9.0 percentage points (8.3) of this total, which is within underlying assumptions. Mutual Fund Savings Products Following a long period of falling sales in connection with the stock market decline, sales increased by 4% compared with the fourth quarter of 2001, to SEK 7.2 billion. However, sales were down 34% compared with the same period a year earlier. Sales in the USA have stabilized and were unchanged compared with the fourth quarter of 2001. Compared with the first quarter of 2001, sales were down 57% in local currency. In the UK, sales increased sharply compared with the preceding quarter, to SEK 2.1 billion. Skandia's market share gradually increased during the second half of 2001 in a contracting market. Sales in the German market are showing continued strong development. Funds under management increased by 12% during the last twelve months, to SEK 111.3 billion. Net flows remained positive during the first quarter, while exchange rate movements had a slight negative impact on the value of funds under management during the first quarter. Life Assurance Sales in Spain decreased as a result of a shift in focus toward unit linked assurance products. Consequently, assets under management decreased from SEK 15.4 billion to SEK 14.3 billion. Operating Result and Profitability Unit Linked Assurance Cost-cutting measures have begun to have an effect, and thus the result for newly written business was higher than during the two preceding quarters. The lower sales volume compared with the first quarter a year earlier had a negative impact on the result. The result for newly written business during the year decreased to SEK 295 million (395). The profit margin was higher compared with the second half of 2001 in both the USA and the UK, but lower compared with the first quarter of 2001. In Sweden the profit margin remained good. In other markets together the margin fell compared with the first quarter of 2001, mainly due to the sharp rise in sales volume in Japan, which is not yet making a positive earnings contribution. Despite lower sales volumes, the result of operations increased by 9% compared with a year earlier, to SEK 955 million (877). Once again, the outcome compared with operative assumptions made a positive contribution to the result, which is an expression of the conservative assumptions used in pricing products. Mutual Fund Savings Products The result was SEK -58 million (13). The result decline is mainly due to acquisition costs in connection with the growth in sales of products with a term extending over several years in new markets, such as Germany. These costs are not deferred. The increase in sales of these products is making a positive contribution to future earnings. The result was also charged with development costs. Life Assurance The result for life assurance was SEK 59 million (34). BUSINESSES It is expected that the awaited regulatory approval that is required to complete the sale of Skandia Asset Management can be received during the second quarter of 2002. The result for the day-to-day business was SEK 8 million (2). SkandiaBanken's result decreased to SEK 8 million (27), mainly due to strong expansion, which requires greater investments in infrastructure. Skandia-Banken grew its customer base during the first quarter by 42,000, to 1,163,000 customers. SkandiaNetline's result improved to SEK 7 million (-13). The result was charged with development costs for the banking operation in Switzerland and costs for the group's Global Business Development unit. The investment income generated by the group's treasury unit improved. The market risk associated with the parent company's investments has decreased. Group Expenses Group expenses comprise management and structural costs. Goodwill amortization has been allocated to the respective business units. Exchange Rate Effects Currency movements had a slight negative impact during the period. Sales were affected by SEK 55 million and the operating result for the group by SEK 3 million, after recalculation to lower average exchange rates compared with the full-year 2001. Total assets decreased by SEK 45 billion during the year as a result of currency movements. BALANCE SHEET AND NET ASSET VALUE Skandia's financial position strengthened during the first quarter. Borrowings decreased, and liquidity is good. Unutilized credit facilities amounted to SEK 9.1 billion. During the first quarter the acquisition of Bankhall was carried out in the UK, leading to an increase in goodwill of SEK 3.0 billion. In connection with the acquisition, as previously announced, a management buyout was conducted of the accompanying IT business, Lynx plc, with financial support to be provided by Skandia for a maximum period of three years. Skandia now owns 19% of If, which means that If is no longer reported in accordance with the equity method. In connection with this, If's continuing result is no longer included in Skandia's result. If is therefore reported in the balance sheet as an investment asset valued at SEK 2.8 billion. The book value of If on the balance sheet is lower than Skandia's share of If's net asset value. Net asset value amounted to SEK 37.2 billion (SEK 37.2 billion at year- end 2001). Capital employed in the group, which in addition to net asset value consists of borrowings to finance investments in subsidiaries, amounted to SEK 52.4 billion (51.5). Borrowing and Liquidity In 2001 the operational cash flow in the unit linked assurance operations was positive in the amount of SEK 1 billion, and for the group as a whole it was positive in the amount of SEK 0.1 billion. The underlying cash flow remained positive during the first quarter, and total borrowings decreased by SEK 2.5 billion. As previously announced, our goal - assuming all other factors are unchanged - is to reduce the group's borrowings by approximately SEK 5 billion during the first half of 2002. Subordinated loans totalling approximately SEK 700 million were floated. Stockholm, 26 April 2002 Lars-Eric Petersson President and CEO For questions, please contact: Jan Erik Back, Chief Financial Officer, tel. +46-8-788 3720 Harry Vos, Head of Investor Relations, tel. +46-8-788 3643 Michael Wolf, Chief Investment Officer, tel. +46-8-788 4559 This interim report has been prepared in conformity with the guidelines of the Swedish Financial Supervisory Authority and Recommendation RR20 of the Swedish Financial Accounting Standards Council. Aside from an adaptation to new accounting recommendations of the Swedish Financial Accounting Standards Council, which took effect on 1 January 2002, the interim report has been prepared in accordance with the same accounting principles as in the 2001 Annual Report. The new recommendations have not had any material impact on the group's profit and loss account or balance sheet. Financial calendar: 14 May 2002, April sales release 8 August 2002, interim report January-June 30 October 2002, interim report January-September Skandia's published financial reports are available on Skandia's website: www.skandia.com. Skandia's website also provides links to the webcast of the conference call on Friday, 26 April 2002. In addition to the interim report, Skandia has also published the document Financial Supplement Q1 on www.skandia.com, under Investor Relations/Reports and Events/Interim Reports. GROUP OVERVIEW Moving 12- month figures 2002 2001 2001 2002 SEK million March March Dec. March Sales Unit linked assurance 22,285 25,827 93,502 89,960 Mutual funds 7,228 11,001 34,831 31,058 Life assurance 247 344 1,276 1,179 Direct sales of funds 1) 1,064 650 3,781 4,195 Businesses 126 107 414 433 Total sales 30,950 37,929 133,804 126,825 Result summary Unit linked assurance 955 877 4,341 4,419 Mutual funds -58 13 -28 -99 Life assurance 59 34 111 136 Businesses 13 -19 41 73 Group expenses -109 -101 -469 -477 Result of operations 860 804 3,996 4,052 Financial effects unit linked assurance -690 -3,347 -5,085 -2,428 Operating result 2) 170 -2,543 -1,089 1,624 Assets under management, SEK billion 1,001 973 1,013 Funds under management, SEK billion 632 609 638 Net asset value, SEK billion 3) 37 36 37 Shareholders' equity, SEK billion 21 21 21 Total assets, SEK billion 605 579 611 Operational return on net asset value % 3) 12 18 12 4) Return on adjusted net asset value, % 3) 4) 5 9 -2 Return on shareholders' equity, % 3) 4) 1 10 0 Per-share data Operating result per share before dilution, 0.17 -2.92 -2.06 SEK 5) Earnings per share before dilution, SEK 3) 0.16 -0.20 -0.05 5) Earnings per share after dilution, SEK 3) 0.15 -0.20 -0.05 5) Net asset value per share, SEK 36.31 34.95 36.38 Shareholders' equity per share, SEK 20.03 20.37 20.07 1) Direct sales of funds for 2001 have been recalculated due to the sale of Skandia Asset Management (SAM). 2) The holding in If now amounts to 19 %, which means that If is no longer reported in accordance with the equity method. For the sake of comparison, earlier periods have also been adjusted accordingly. The operating result for If for these periods amounted to SEK - 445 million as per March 2001 and SEK 1,015 million as per Dec. 2001. 3) For definition, see page 16. 4) All return measurements for shareholders' equity and net asset value pertain to moving twelve-month figures. 5) According to recommendation RR18 of the Swedish Financial Accounting Standards Council, the dilutive effect is calculated if the key ratio "Earnings per share" deteriorates. GROUP OVERVIEW - QUARTERLY ANALYSIS 2002 2001 2001 2001 2001 SEK million Q 1 Q 4 Q 3 Q 2 Q 1 Sales Unit linked assurance 22,285 21,708 20,522 25,445 25,827 Mutual funds 7,228 6,975 7,031 9,824 11,001 Life assurance 247 381 238 313 344 Direct sales of funds 1,064 578 587 1,966 650 Businesses 126 106 93 108 107 Total sales 30,950 29,748 28,471 37,656 37,929 Result summary Unit linked assurance 955 1,379 736 1,349 877 Mutual funds -58 -18 -42 19 13 Life assurance 59 25 28 24 34 Businesses 13 -3 6 57 -19 Group expenses -109 -133 -124 -111 -101 Result of operations 860 1,250 604 1,338 804 Financial effects unit -690 2,347 -4,342 257 -3,347 linked assurance Operating result 170 3,597 -3,738 1,595 -2,543 CHANGE IN FUNDS UNDER MANAGEMENT UNIT LINKED ASSURANCE 2002 % of 2001 % of assets assets SEK million 3 mos. at start 12 mos. at start of year of year Unit linked assurance at 503,671 500,993 start of year Sales 22,285 4.4% 93,502 18.7% Withdrawals -13,731 -2.7% -49,010 -9.8% Change in value -738 -0.1% -85,472 -17.1% Currency effects -12,450 -2.5% 43,658 8.7% Unit linked assurance at 499,037 - 0,9% 503,671 + 0,5% end of period MUTUAL FUNDS 2002 % of 2001 % of assets assets SEK million 3 mos. at start 12 mos. at start of year of year Savings in mutual funds 113,268 107,591 at start of year Sales 7,228 6.4% 34,831 32.4% Withdrawals -4,766 -4.2% -21,837 -20.3% Change in value -1,502 -1.3% -16,910 -15.7% Currency effects -2,909 -2.6% 9,593 8.9% Savings in mutual funds 111,319 - 1,7% 113,268 + 5,3% at end of period TOTAL FUNDS UNDER MANAGEMENT 2002 2001 SEK million 3 mos. 12 mos. Unit linked assurance 499,037 503,671 Mutual funds 111,319 113,268 Directly distributed 21,579 20,686 funds Funds under management 631,935 637,625 TRADING ANALYSIS, UNIT LINKED ASSURANCE 2002 2001 2001 SEK 3 3 mos. 12 mos. million mos. Total annualized 3,339 4,099 15,038 new sales 1) Present value of new business for 295 395 1,381 the year Return on value of contracts in force from previous years 777 625 3,095 Outcome compared with operative 133 120 361 assumptions Change in operative -11 -29 600 assumptions Value-added from 1,194 1,111 5,437 operations Business start-ups and other -26 -17 -180 overheads Financing costs -213 -217 -916 Result of operations, unit linked assurance 955 877 4,341 Financial -690 -3,347 -5,085 effects 2) Operating result, unit linked 265 -2,470 -744 assurance Profit margin, new sales 3) 8.8% 9.6% 9.2% 1) Periodic premiums recalculated to full-year figures plus 1/10 of single premiums during the period. 2) The effect on the present value of future revenues attributable to the fact that the change in financial markets differs from assumptions on fund growth and interest rates. 3) Present value of new business for the year in relation to total annualized new sales. INCOME AND EXPENSE ANALYSIS UNIT LINKED ASSURANCE 2002 2001 2001 SEK 3 mos. 3 mos. 12 mos. million Gross 2,564 2,478 11,845 contribution Acquisitio -1,925 -1,914 -8,289 n costs Administrative -614 -618 -2,698 expenses Change in deferred 448 446 830 acquisition costs Technical 473 392 1,688 result Investment 68 62 466 income Financing -213 -217 -916 costs Change in surplus value of unit -63 -2,707 -1,982 linked business in force Operating result, unit 265 -2,470 -744 linked NEW SALES AND PROFIT MARGIN, UNIT LINKED ASSURANCE PER GEOGRAPHIC AREA Present value of new Annualized new business for Profit margin, new sales the year sales 2002 2001 2001 200 2001 2001 2002 2001 2001 2 SEK 3 3 12 3 3 12 3 3 12 million mos. mos. mos. mos mos. mos. mos. mos. mos. . USA 906 1,136 4,219 -23 7 -57 -2.5% 0.6% -1.4% UK 1,129 1,361 5,065 127 150 507 11.2% 11.0% 10.0% Sweden 811 1,022 3,539 139 146 631 17.1% 14.3% 17.8% Other 493 580 2,215 52 92 300 10.5% 15.9% 13.5% markets Total 3,339 4,099 15,038 295 395 1,381 8.8% 9.6% 9.2% STATEMENT OF CASH FLOWS 2002 2001 2001 SEK billion 3 3 12 mos. mos. mos. Cash flow from operating activities 0.0 -0.1 0.1 1) Cash flow from 3.0 0.8 -4.8 investment operations 2) 3) Cash flow from -3.0 0.1 6.0 financing activities 4) Net cash flow for the 0.0 0.8 1.3 period Liquid assets at the 4.6 3.1 3.1 start of the period Exchange rate differences -0.2 0.2 0.2 in liquid assets Liquid assets at the 4.4 4.1 4.6 end of the period 1) The underlying cash flow from operating activities is positive but was offset by the fact that certain new receivables during the period have not yet fallen due for payment. 2) Purchases and sales of investment assets, which are a natural element of an insurance company's operations, are reported as cash flow from investments in operations. Cash flow has been affected by the direct yield from investments, but not by the changes in value these have had. 3) Pertains to payment for the acquisition of Bankhall, payment from the sale of If and sale of investment assets. 4) Pertains to repayment of loans. NET ASSET VALUE 2002 2001 SEK million 31 March 31 Dec. Shareholders' 20,506 20,538 equity Deferred taxes, 4,700 4,346 net Surplus value of unit linked business in force after 11,880 12,249 deferred tax Other surplus 79 103 values Net asset value 37,165 37,236 Subordinated loans 906 214 Risk-bearing 38,071 37,450 capital CHANGE IN NET ASSET VALUE AND SHAREHOLDERS' EQUITY 1) Net asset Shareholders' value equity 2002 2002 2001 SEK million 31 March 31 March 31 March Opening balance 37,236 20,538 20,749 Result before 170 233 -281 taxes Income taxes 171 -79 84 Change in surplus -22 - - value of bonds Deferred tax on surplus value of unit linked -46 - - business in force Dividend - - - Translation -350 -192 303 differences Minority interests 6 6 -3 Closing balance 37,165 20,506 20,852 1) Distributable earnings in April 2002 will decrease by a total of SEK 307 million as a result of the approved dividend. PROFIT AND LOSS ACCOUNT 2002 2001 2001 SEK million 3 mos. 3 mos. 12 mos. Technical account, property & casualty insurance business Premiums earned, net of reinsurance 105 99 398 Allocated investment return transferred from the non-technical account 10 10 41 Claims incurred, net of reinsurance -68 -70 -248 Operating expenses -32 -24 -135 Technical result, property & casualty 15 15 56 insurance business Technical account, life assurance business Premiums written, net of reinsurance 22,143 25,607 92,982 Investment income, including unrealized 2,173 -55,633 -68,579 changes in value Claims incurred, net of reinsurance -13,403 -12,257 -48,798 Change in other technical provisions where the investment risk is borne by the life assurance -8,817 42,283 29,209 policyholders Operating expenses 1) -2,021 -2,015 -9,889 Change in CARVM offset 1) -196 1,268 3,251 Other technical provisions 655 1,173 3,623 Technical result, life assurance 534 426 1,799 business Non-technical account Investment income, including unrealized 79 -5 370 changes in value 2) Financing costs -186 -194 -775 Mutual funds -56 15 -19 Other operations 2) 6 24 -5 Amortization of goodwill -50 -26 -117 Structural costs -20 -12 -94 Group expenses -89 -79 -322 Share in result of If - -445 -1,015 Pre-tax result 233 -281 -122 Paid and deferred tax -79 84 64 Minority interests in result for the 6 -3 3 period Result for the period 160 -200 -55 Key ratios Average number of shares before 1,024 1,024 1,024 dilution, millions Average number of shares after dilution, 1,029 1,027 1,024 millions 3) Earnings per share before dilution, SEK 0.16 -0.20 -0.05 5) Earnings per share after dilution, SEK 0.15 -0.20 -0.05 4) 5) Direct yield, % 0.3 0.8 2.7 Total return, % 0.4 -1.0 1.5 1) In the US operations, DAC is carried net of the "CARVM offset", representing the approximate present value of surrender charges which could be payable if all contracts were surrendered today. Surrender charges, and consequently the CARVM offset, are primarily affected by account values, and thus a reduction in account value reduces the CARVM offset. 2) Comparison figures for 2001 have been recalculated so that SkandiaBanken includes Skandia Marketing. 3) Data on the number of shares after dilution takes into account Skandia's stock option programme for the years 2000-2002. 4) According to recommendation RR18 of the Swedish Financial Accounting Standards Council, the dilutive effect is calculated if the key ratio "Earnings per share" deteriorates. 5) Earnings per share are calculated as the result for the period divided by the average number of shares outstanding. OPERATING RESULT SEK million Unit Group P&C 2002 linked Mutual Life Busi- admin insur- Operating 3 mos. assurance funds assur nesses exp. ance result ance Technical result P&C insurance 5 10 15 Life assurance 473 61 534 Non-technical result Investment 68 21 -10 79 income Financing costs -213 -2 29 -186 Change in 0 surplus value of unit 0 linked business in -63 -63 force Mutual funds -56 -56 Other 6 6 businesses Amortization 0 of goodwill -2 -48 -50 Structural -20 -20 costs Group expenses -89 -89 Operating 265 -58 59 13 -109 0 170 result Of which, change in surplus value of unit linked business in 63 63 force Pre-tax result 328 -58 59 13 -109 0 233 Unit Group P&C 2001 linked Mutual Life Busi- admin insur- Operating 3 mos. assurance funds assur nesses exp. ance result ance Technical result P&C insurance 5 10 15 Life assurance 392 34 426 Non-technical result Investment 62 -57 -10 -5 income 1) Financing costs -217 -2 25 -194 Change in surplus value of unit linked business in -2,707 -2,707 force Mutual funds 15 15 Other 24 24 businesses 1) Amortization of goodwill -16 -10 -26 Structural -12 -12 costs Group expenses -79 -79 Operating -2,470 13 34 -19 -101 0 -2,543 result Of which, change in surplus value of unit linked business in 2,707 2,707 force Investment income, share in -445 -445 result of If Pre-tax result 237 13 34 -19 -101 -445 -281 1) Comparison figures for 2001 have been recalculated so that SkandiaBanken includes Skandia Marketing. BALANCE SHEET SUMMARY SEK billion 2002 2001 Shareholders' 2002 2001 equity, Assets 31 31 provisions and 31 31 Mar. Dec. liabilities Mar. Dec. Intangible assets 4.4 1.3 Shareholders' 20.5 20.5 equity Investments in If, 0.0 4.5 Minority interests 0.1 0.0 etc. Investments 3) 24.8 26.3 Subordinated loans 0.9 0.2 2) Investments, unit 499.0 503.7 Technical 21.1 22.1 linked assurance provisions 1) Reinsurers' share Provisions, unit 483.3 487.1 of linked assurance 1) technical 16.8 17.9 Liabilities in provisions 1) bank operations Assets in bank and finance 32.4 29.5 operations companies 2) and finance 35.0 32.4 Deferred tax 5.3 4.7 companies liability Debtors 5.5 4.4 Borrowings 2) 14.2 17.3 Tangible assets 0.8 0.8 Deposits from 17.9 19.0 reinsurers Cash at bank and 4.4 4.6 Other creditors 6.5 6.7 in hand Other assets 0.0 0.5 Reinsurers' share of Deferred 13.0 13.1 deferred 0.6 0.6 acquisition costs acquisition costs 1) 4) 1) Other prepayments Other accruals and and accrued income 1.5 1.1 deferred income 2.4 2.9 Shareholders' equity, Assets 605.2 610.6 provisions and 605.2 610.6 liabilities 1) Technical provisions, net, after deducting deferred acquisition costs Life assurance 13.2 14.2 Unit linked 461.0 463.7 assurance Property & 1.0 0.9 casualty insurance Total 475.2 478.8 2) Group borrowings, excl. subordinated loans in Skandia Insurance Company Ltd. Borrowings as per balance sheet, 15.1 17.5 including subordinated loans Additional borrowings by finance companies and bank 0.0 0.1 operations Borrowings, gross 15.1 17.6 Less: subordinated loans in Skandia Insurance -0.9 -0.2 Company Ltd. Borrowings, net 14.2 17.4 3) Investments, current value Investments as per 24.8 26.3 balance sheet Recalculation to 0.4 0.7 current value Cash at bank and 4.4 4.6 in hand Securities 0.0 0.5 settlement claims, net Accrued interest 0.4 0.3 income Debt derivatives -0.1 -0.1 Total 29.9 32.3 Of which: Investments, life 14.3 15.4 assurance Investments, unit 8.2 8.9 linked assurance Investments, 0.9 0.8 mutual funds Other investment 6.1 3.5 assets Deposit for the 0.0 3.2 acquisition of Bankhall Currency 0.4 0.5 derivatives Deposits with 0.0 0.0 ceding undertakings Total 29.9 32.3 4) Deferred acquisition costs Deferred acquisition costs 21.8 21.9 before CARVM offset CARVM offset* -8.8 -8.8 Total 13.0 13.1 * See page 12, note 1 for explanation. RESULT OF OPERATIONS, BUSINESSES 2002 2001 2001 SEK million 3 mos. 3 mos. 12 mos. SkandiaBanken 8 27 79 Global Business -22 0 -13 Development Group Treasury 60 -21 96 Asset Management 8 2 17 Netline 7 -13 15 Finance companies 3 4 9 Other 1) -51 -18 -162 Total 13 -19 41 1) Includes start-up costs for Skandia Finanz, Skandia's new bank in Switzerland. A banking licence was received in July 2001, and business is scheduled to commence during 2002. GROUP EXPENSES 2002 2001 2001 SEK million 3 mos. 3 mos. 12 mos. Amortization of goodwill - -10 -53 Structural costs -20 -12 -94 Joint-group management -89 -79 -322 expenses Total -109 -101 -469 EXCHANGE RATES 2002 2001 2001 2001 2001 SEK 31 31 30 30 31 Mar. Mar. Dec. Sept. June EUR Closing rate 9.04 9.33 9.72 9.22 9.15 EUR Average rate 9.14 9.29 9.22 9.08 9.00 GBP Closing rate 14.75 15.32 15.68 15.31 14.82 GBP Average rate 14.98 15.01 14.91 14.69 14.22 USD Closing rate 10.36 10.58 10.67 10.89 10.39 USD Average rate 10.51 10.43 10.37 10.26 9.74 JPY Closing rate 0.078 0.081 0.090 0.087 0.083 JPY Average rate 0.079 0.086 0.086 0.085 0.083 Average rates indicate the average rates for the period 1 January through the respective book-closing dates in 2002 and 2001. Glossary Adjusted net asset value: Net asset value after deduction for net deferred taxes. Annualized new sales: Periodic premiums recalculated to full-year figures, plus 1/10 of single premiums during the period. Capital employed: Net asset value, borrowings for investments in subsidiaries, and minority interests. Financial effects: The effect on the present value of future fees caused by the deviation of the financial market trend from assumptions on fund growth and interest rates. Funds under management: Assets under management for unit linked assurance and mutual funds. Gross contribution: Unit linked assurance fees after deduction of necessary actuarial reserves. Net asset value: Shareholders' equity as per the balance sheet, net deferred tax liability, surplus values of unit linked business in force after deducting deferred tax, and unrealized changes in the value of fixed-income securities. Operating result: Pre-tax result plus changes in surplus values of unit linked business in force. Premiums earned: The portion of premium income attributable to the period, i.e., premiums written less reinsurance premiums, adjusted for the portion of premiums not yet earned. Premiums written: Total premiums received during the period or taken up as a receivable at the end of the period. Result of operations: Operating result before financial effects in unit linked assurance. Surplus value of unit linked business in force: The present value of calculated future surpluses from the annual fees paid by policyholders for contracts in force. The group's operating result includes the change in these surplus values for the period. Technical result, life assurance: The balance on the technical account for life assurance, including direct investment income and changes in value of investments transferred from the non-technical account. Technical result, property & casualty insurance: Premiums earned less claim costs and operating expenses, plus the investment return transferred from the non-technical account. Value-added from operations (unit linked assurance): Result of operations excluding financing costs, costs for business start- ups and other overheads. Key Ratios Direct yield: Direct investment income (before deducting administrative expenses) as a percentage of a weighted average of the current value of investments. Earnings per share: The result for the period divided by the average number of shares outstanding. Operational return on net asset value: The result of operations for the last 12-month period in relation to average net asset value adjusted for investments in associated companies. Profit margin: Present value of new business for the year in relation to total annualized new sales. Return on adjusted net asset value: Operating result for the last 12-month period plus other changes in surplus values, less current and deferred tax and minority interests, in relation to adjusted average net asset value. Return on shareholders' equity: Result for the last 12-month period in relation to average shareholders' equity. Total return: The sum of direct investment income (before deducting administrative expenses) and realized and unrealized changes in value, as a percentage of a weighted average of the current value of investments. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/04/26/20020426BIT00020/wkr0001.doc http://www.waymaker.net/bitonline/2002/04/26/20020426BIT00020/wkr0002.pdf