Management Presentation

Transcription

1 Management Presentation 26 November, 2001 Handelsbanken Liv Anders Östryd, CEO Henrik Sandberg, CFO Barbro Johansson, CEO Bo Frogner, CFO

2 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - Handelsbanken Liv - SPP 5) Beyond 2004

3 Legal entities Handelsbanken Liv Försäkrings AB mutual insurance company Handelsbanken Liv Fondförsäkrings AB unit linked insurance SHB Liv Forsikringsaktieselskab unit linked insurance Denmark, Norway, Finland

4 The history RKA Ränte- och kapitalförsäkringsanstalten Co-operation between RKA and the Saving banks Co-operation between RKA and Handelsbanken Handelsbanken Liv Fondförsäkrings AB RKA becomes Handelsbanken Liv wholly owned subsidiary of Handelsbanken SHB Liv A/S

5 Mission to offer the bank s customers life insurance solutions provided by the branches with support of our expert advisors

6 Handelsbanken Liv Organisation Norway HL branch SHB Liv A/S branch Finland SHB Liv A/S branch Sweden Handelsbanken Liv 7 regions Denmark SHB Liv A/S Management Presentation November 2001 Försäkringsdagen.ppt 6

7 Customer focused organisation Expert advisor HL Branch Customer Business responsibility Annual commission Customer responsibility

8 Overview 30 sept 2001 Premium income Assets Collective surplus 99 % Number of employees ( whereof expert advisors 100) Number of policies SEK 4.4 bn SEK 33 bn Unit linked traditional Operating result Unit Linked SEK 31 m

9 Product offerings Private pensions Flexible pension solutions combining; - Private Pensions - Sickness benefits - Pensions for survivors - Accidents and life insurance Collective occupational pensions

10 Product offerings Endowments and annuities for - generation planning - long-term savings and investments Group life insurance - protection for business partners - loan protection - group life for bank customers Occupational pensions

11 Product mix 3% Jan-Oct % 3% 4% Jan-Oct % Endowment Occupational Private Collective Nordic Others 4% 16% 7% 52% 8% 14% 77% SEK 4,9 bn SEK 7,7 bn

12 Premium income SEK m Unit Link Tradition *

13 Expense ratio (Operating expenses to premium income) Traditional Industry average 10,8% 10,2% Unit linked Industry average 6,8% 6,2% Traditional and unit linked Handelsbanken Liv 4,1% 3,6%

14 Assets under management SEK m Unit linked Traditional

15 Profits from insurance operations SEK m Asset mgmt Branch office SHB Liv

16 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - Handelsbanken Liv - SPP 5) Beyond 2004

17 Introduction SPP of today: a growth company a strong track record unique expertise

18 Legal structure SPP Livförsäkring AB 50% 50% SPP Liv Pensionstjänst SPP Liv Fondförsäkring AB Nordben Euroben SPP Konsult AB

19 Overview Premium income SEK 13.5 (10.0) bn Assets under management SEK 81 (86) bn Collective surplus of 108 per cent Number of employees 675 (592) Customers (policies) Company customers

20 Mission - to be the leading pension partner by promoting long-term savings solutions Strategy - to capitalise on strong relations with employers and trad unions

21 The leading pension insurer Non-existing competitive business (1994) SPP Liv was set up to defend deregulation and to exploit new opportunities in deregulated markets and emerging segments The Business Strategy Developed out of SPP s strength Driven by market factors Based on three cornerstones Leading occupational pension player A leading company in competitive occupational pensions, private pensions markets and PPM

22 Strengths and market factors SPP s strengths Market factors Relationships with employers and trade unions Broad and deep consumer base Unique competence Strong brand name Deregulation Individualisation of pensions markets Increasing needs for long-ter savings Business strategy based on three cornerstones

23 Cornerstone 1 SPP s view of the market The company decides The consumer decides Segment 1-2 are core markets ompany ays 1 2 Segment 2 is largest and fastes growing onsumer ays 3 4 Strength in segment 1 leads to success in segment 2

24 Cornerstone 2 Product offerings Separation of risk from savings Offering combines three types of benefits Offerings are completely flexible ART C1 C0 RTDR RR C3 EL UR R 401 Z ER D1 SFS L 411 Dik EDL RER 412 D2 Sickness benefit Pensions for survivors Pensions for you

25 Cornerstone 3 Customer segmentation The work place as a market place Org. Key account companies Large, medium sized or small companies VIPs Strong relationships with companies op doors to the work place Significant reach business customers 1.0 million target offerings Individuals

26 Work-site marketing High earners (10 taggare) Market share of High earners ( salary >SEK ) 100% 2001E 46% 100% 90% 80% 70% 60% 50% 27% 40% 30% 27% 20% 10% 0% SPP Other chosen No choice yet Total

27 Work-site marketing through DM - a cost effective way to reach individuals 10% 8-10% Hit rates on direct mail campaigns 3-6% 1.5% 1.0% 0% Salary- Pension Swap Worksite marketing via companies Worksite marketing via organisations DM through an external base

28 Growth in premium income Premium income SEK bn Unit-linked Traditional 10,0 13, E SPP s growth E: Swedish market growth E: 48% Average per year 18% Average per year

29 Understanding customers - the key to success Companies Individuals ustomers Benefit managers, CFOs, CEOs, HR departments Consumers ustomer needs/ rvices Advice Simplicity/clarity arketplace/ mmunication ompetition Business to business International and Swedish insurers Worksite and kitchen table marketing Swedish insurers, banks and fund managers

30 Customer-oriented organisation CEO Support functions Controlling & finance BU Key Account BU Companies BU Individuals Development Project support/it Production support Development support Regional fit with SHB s seven regional banks

31 Sales by business unit New sales 2001E 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 32% 53% 15% 100% 0% Key Account Companies Individuals Total Customers ,000 (Policies)

32 Sales channels New sales by distribution channel 2001E MSEK % % 6700 Short-term goal to increase sales through brokers and franchisees Long-term goal to make increase use of direct marketing and Internet channels % Own sales force Brokers and franchise Other (Direct; Internet) Total

33 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - Handelsbanken Liv - SPP 5) Beyond 2004

34 The market in premium income SEK bn 180 Sickness and accidents Endowement insurance 160 Privat pensions PPM Volontary occupational pensions Collective occupational pensions : Total competitive markets

35 Market shares September 2001 Market shares (%): SHB SPP TOTALT Total premium income (12 months) New sales, total Life (Jan - Sept 2001 ) occupational pensions private pensions endowment policies

36 Market position January - september 2001 Life insurance SHB/SPP SEB FSB NB Skandia Total premium income New sales Occupational pensions private pensions endowment insurance

37 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - SPP - Handelsbanken Liv 5) Beyond 2004

38 Outlook to 2005 ompany ays onsumer ays The company decides SEK 38 bn The consumer decides % + 36% 3 4 SEK 8 bn % SEK 68 bn SEK 52 bn % Total market increases fr 136 to SEK 166 bn Segment 2 is the largest the fastest growing segm (+ 36 % between 2001 a 2005) Segment 4 is sensitive to equity markets

39 40% Market shares of deregulated pension markets 35.7% 30% 5,1% Handelsbanken Liv SPP Liv 20% 17.5% 30,6% 12.3% 6,3% 10% 0% 5,6% 6,7% 4.0% 2,7% 1,3% 11,2% ITPK PFA-98 SAF/LO PPM White collar employees Municipalities Blue collar employees State pensions Market value 2001 SEK: 5 bn 7 bn 6 bn 18 bn

40 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - Handelsbanken Liv - SPP 5) Beyond 2004

41 Handelsbanken Liv will be the first life insurance company to... demutualise... allow transfer of insurance cap merge traditional insurance an linked insurance into a single company

42 The demutualisation Allocate the collective surplus to policyholders Handelsbanken invests new risk capital (equity) No deterioration of conditions for the policyholder Ask the customer

43 The approval 80 % of the policyholders voted 98 % voted yes The Financial Supervisory Authority approved in February 2001 The government approved in April 2001

44 90 % total yield Demutualisation Shareholders equity collective surplus Allocated Bonuses Bonuses Total yield Interest Life insurance provisions Life insurance provisions 100 percent to customers - but not to the customer 90 percent direct to the single customer

45 Our future model Fixed prices for operational cost and risk premium Administration profit/loss - to the company Risk profit/loss - to the company 90 % of total yield to the policyholders - 10 % to the company The company assumes the risk for guaranteed obligations

46 Our message Increased security The Bank contributes new equity The customer no longer needs to bear the risk for the guaranteed ra of interest. Increased freedom Possibility to change asset management form Private customers allowed to transfer their insurance capital to other companies. Increased justice Individual system Always 90 per cent of total yield

47 Guarantee fund Ordinary fund Level of guarantee "Guarantee fund"

48 90 % total yield areholders equity Bonuses Allocated bonus in percentage of life insurance provisions ife insurance provisions 2500 SEK million < >9 interval (%)

49 New policies 2002 uarantee rate of interest 3 percent - New policies have a qualifying period of 36 months ight to transfer - New policies have no guaranteed value to transfer during the first 36 month nit Linked and Guaranteed insurance linked together in the same policy

50 Who bears the risk? Unit linked Administration result Company Traditional Company Risk result Company Company Investment result Policy holder Policy holder and company Investment result on equity Company Company Handelsban

51 Operating result Unit-linked, SEK m Jan- Sept Jan-Dec Jan-Dec Income Expenses Administration result Risk result Investment result Investment result on equity Operating result

52 Income, quarterly Unit-linked, SEK m Commission, ne Fees, other Fees, premium Fees, assets :1 99:2 99:3 99:4 00:1 00:2 00:3 00:4 01:1 01:2 01:3

53 Administration result, quarterly, Unit-linked, SEK m Income Expens :1 99:2 99:3 99:4 00:1 00:2 00:3 00:4 01:1 01:2 01:3

54 Total yield j-s % Average 13

55 Operating result if demutualised 1999 SEK m Jan- Sept Jan-Dec Jan-Dec Income Expenses Administration result Risk result Investment result Investment result on equity Operating result

56 Required solvency margin 4 % on technical provisions 1 % on allocated bonuses 1 % on unit linked

57 Balance sheet if demutualised SEK m, Sept 2001 Unit linked Traditional Total Investments Other assets Total assets Shareholders' equity Technical provisions Provisons where the risk is born by the policyholder Other liabilities Total shareholders' equity, provisions and liabilities

58 Estimated operating result Unit linked and traditional, SEK m Jan-Dec Jan-Dec Assumptions: Income Growth premium income 5% Expenses -350* -300 Total yield 7% Administration result Risk result 0 10 Investment result Investment result on equity Operating result If total yield 10% Operating result * one-off expenses SEK m 35

59 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - Handelsbanken Liv - SPP 5) Beyond 2004

60 The surplus - the collective reserve Oct SPP AMF Handelbanken Skandia SEB New LF SEB Old KPA Folksam SparLiv

61 Expense ratio - traditional insurance (expenses to premium income) 25% 20% 21,9% 15% 10% 9,7% 10,7% 11,9% 12,1% 13,3% 15,1% 6,6% 5% 0% 2,0% AMF SEB New SPP SEB Old SHB Folksam Skandia LF KPA

62 Expense ratio - Unit linked insurance (expenses to premium income) 16% 14,4% 14% 12,3% 12% 10% 9,6% 8% 7,1% 6% 4% 4,2% 5,2% 2% 0% 0,8% SHB SPP Skandia SEB Folksam LF Folksam LO

63 Premium income and new sales SEK m Premium income New sales F

64 rce: SPP Asset under management AUM SEK Bn AUM (SEK bn) Unit-linked Traditional Oct ,3 81,2

65 Five years summary of key ratios Key ratios E Expense ratio Expense ratio, Traditional Expense ratio, Unit-Linked Asset management expense ratio *) Acquisition expense ratio Administrative expense ratio, savings products Administrative expense ratio, risk products Collective solvency margin ** Total yield % *) October 2001

66 SPP s will demutualise 2004 Changing focus from volume growth to growth in profitability SPP has great opportunities to create a cost effective and profitable business concept Cost effective distribution Economies of scale Broad and deep customer base Synergies with SHB and SHB Liv

67 Hypothetical calculation of operating result for SPP Operating result, SEK Million Income Premium fees Asset fees Payment fees Total income Expenses Assets under management Total yield 15,2 19,1 3,3 Investment result (10%) Investment result of shareholder equity Operating result before tax

68 Agenda 1) History, business concept and organisation - Handelsbanken Liv - SPP 2) Total market and market shares 3) The occupational pension market and SPP s competitive position 4) Demutualisation and financials - SPP - Handelsbanken Liv 5) Beyond 2004

69 Pension and insurance in Handelsbanken SPP and Handelsbanken separate entities 2002 and 2003 When demutualisation of SPP: Merger of SPP and Handelsbanken Liv Single brand Multi channel distribution according to Handelsbanken Liv s concept and SPP s work site marketing concept