Contents. THE CHIEF EXECUTIVE S COMMENTS 2 Administration report 4 Five-year overview 8

Transcription

1 Annual Report 2015

2 Contents THE CHIEF EXECUTIVE S COMMENTS 2 Administration report 4 Five-year overview 8 FINANCIAL REPORTS Alternative income statement 10 Income statement 11 Statement of comprehensive income 11 Analysis of results 12 Balance sheet assets 13 Balance sheet liabilities 14 Statement of changes in equity 15 Cash flow statement 16 Notes 17 RECOMMENDED APPROPRIATION OF PROFIT AND STATEMENT FROM THE BOARD 37 AUDITOR S REPORT 38 BOARD AND MANAGEMENT 39 DEFINITIONS 40 Handelsbanken Liv AB (publ) Corporate identity no Registered office: Stockholm handelsbanken.se/forsakring This Annual Report is also available in Swedish. 1

3 the chief executive's comments A year with pension savings in focus For many of our customers, the changed rules regarding the right to claim a tax deduction for private pension savings put focus on the need to save. Within our occupational pension offering, our Pensionsplan Företag (Corporate Pension Plan) was launched and was well received by corporate customers and insurance advisors alike. We are continuing our work with sustainability as an area of continuous development was the year when many of our customers went from having a private pension savings plan that allowed claiming deductions in their tax returns to starting a new savings plan where the need to complement their future pension was brought into focus. Most of our customers have terminated their previous private pension savings arrangements and a large proportion of these have also started a new savings plan. It s pleasing to see that our customers, who have previously benefited from the right to claim deductions, have been reviewing their long-term savings and found new forms of saving. As this need has come into focus, we have also noticed that the savings amounts have been considerably higher than before. The fact that the responsibility lies with each and every one of us to consider how our income is affected by retirement, is also reflected in our offering aimed at corporate customers. A new package, Pensionsplan Företag, was launched in the autumn of 2015 and has been well received by customers and advisors alike. Pensionsplan Företag is an occupational pension solution that includes the most important elements of a savings and security package for company owners and employees. And above all, it is easy to sign up for, which has been greatly appreciated. As the need among our customers to make active choices in all parts of the pension pyramid has grown along with their interest in such matters, so too has our ambition to be able to meet these needs in a positive manner grown. In recognition of this, we therefore completed an upskilling programme during the year, for around 3,400 employees at the Bank whose job it is to provide advice to our customers on matters relating to pensions and insurance. We make a lot of demands on our employees in terms of their know-how and experience, to ensure that we can provide our customers with high quality, well-founded advice, based on their needs. Despite a turbulent year in the market, I am pleased to be able to report that the pensions business at Handelsbanken is growing. Many customers have chosen to entrust us with their pension funds and the volume of new policies sold grew by 45 per cent. Total premiums written rose by 26 per cent and at year-end, the total volume of assets under management stood at SEK billion, an increase of 9 per cent. Handelsbanken s mutual funds continue to be highly ranked and our range of generationrelated funds are among those which are very competitive. According to the independent fund rating company Morningstar, our funds continue to have the highest average rating among the major Swedish banks. In 2015, the return on our traditionally managed policies fell heavily compared to the previous year. Assets in our traditional holdings are predominantly invested in the fixed income market. Interest rate levels remained extremely low during the year, and this affected returns, with the result that none of our portfolios reached its guaranteed level of return. We are on track with the implementation of all the new regulations covering our operations and are ready for Solvency II, which came into effect on 1 January this year. The interest in sustainable investments is growing and during the year we continued our work to align our offerings more closely to these criteria. This area is constantly evolving and in the coming year, we are looking forward to further enhancing and focusing Handelsbanken Liv s customer offerings in the area of sustainable investments. Finally, I would like to extend my thanks to our customers for their continued confidence over the past year, as expressed in the annual customer survey carried out by the Swedish Quality Index (SKI). The level of customer satisfaction has risen considerably, and in 2015, Handelsbanken Liv once again had the most satisfied customers among the major Swedish bank-owned life insurance companies. This achievement is as important as it is rewarding. Thank you! Louise Sander Stockholm, March

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5 administration report Administration report Handelsbanken Liv Försäkringsaktiebolag (Handelsbanken Liv), corporate identity number , is domiciled in Stockholm. The company is a wholly owned subsidiary of Svenska Handelsbanken AB (publ), corporate identity number (Handelsbanken). INTRODUCTION Since 2002, Handelsbanken Liv has conducted life insurance business with traditional insurance and unit-linked insurance in the same company. It has been demutualised and run as a profitdistributing company since Operations Handelsbanken Liv offers customers a broad range of life insurance savings products. This is part of Handelsbanken s full-service concept, where life insurance is a natural part of the customer offering for long-term savings. Financial performance Assets managed at year-end were SEK 111 billion (102). The positive net flow for unit-linked insurance continued in 2015 and totalled SEK 5.0 billion (4.4). Assets managed in unitlinked insurance rose by SEK 8 billion to SEK 82 billion (74) due to the net flow, but also to positive value growth during the year. For portfolio bond insurance, the net flow was positive, amounting to SEK 0.4 billion (-0.3). Assets managed in portfolio bond insurance rose by just over 7 per cent to SEK 19 billion (18), due to positive value growth and a positive net flow. Assets in insurance with guaranteed interest fell from SEK 9 billion at the start of the year to SEK 8 billion at year-end. The net flow thus totalled SEK -1.1 billion (-1.1). Profit before tax was SEK 870 million (857). The improvement in profit was attributable to the continuing growth in fee and commission income. Expenses increased during the year, as a result of rising system investments linked to regulatory changes. For most policyholders, returns in traditionally managed portfolios were lower than the guaranteed interest rate and the company therefore needed to contribute funds for these policies. The results for unit-linked and portfolio bond insurance remained good, and are increasing with growing volumes. Appropriation of profit The Board and Chief Executive propose that the amount at the disposal of the AGM SEK 8,865,038,121 be allocated so that SEK 2,300,000,000 is distributed to the shareholder and the remainder carried forward to the next year. The detailed recommended appropriation of profit is on page 37. INSURANCE OPERATIONS Market Handelsbanken Liv s business concept is to provide solutions that offer financial security through insurance via long-term savings and cover in the event of death, accident or sickness. Insurance is sold through the Bank s branches, by phone and online. The company is continually striving to develop its insurance savings offerings and make its products more accessible and easy to understand for customers. Handelsbanken Liv has continued to develop its business for insurance paid by companies. In late 2015, a simple new corporate plan was launched, which immediately caused a sharp increase in activity in the area. The Swedish parliament s decision on tax deduction rights for pension savings being reduced in 2015 and abolished in 2016 had a major impact on both customers and the company s operations. During the year, to meet this change and to offer our customers a good alternative, we introduced a new form of private pension savings in the capital-taxed environment: Kapitalspar Pension. This new product has been a major success, and premiums written in private pension savings were almost unchanged on a year-on-year basis. New sales of collective agreement occupational pensions rose sharply during the year. This was partly attributable to the fact that large parts of the occupational pension area were more or less unavailable for much of The SAF-LO area was opened in May and KAP-KL became available again in September New sales increased by just over SEK 1 billion, amounting to SEK 1.4 billion (0.4). In 2015, we transferred SEK 2.3 billion into the company, as compared to SEK 1.7 billion in the previous year. Our activity in the pensions area and the valuable support we have created for the branches have had an impact. Sales of endowment insurance continue to improve. Both companies and private individuals are taking out this type of insurance. The continuing interest from corporate customers is particularly gratifying, since historically we have found it difficult to attract companies to invest surplus liquidity in endowment insurance. Sales in the Finnish subsidiary are continuing to improve. Premiums written increased by 24 per cent (20), expressed in local currency. In Finland we offer customers unit-linked insurance with portfolio management. Future developments Most of our insurance commitments are longterm, and changes in the business environment are difficult to predict. Therefore it is vital that our customer offering is designed to be flexible and sustainable. We will continue to develop and grow in the area of occupational pensions with the goal of growing more quickly than the market outside traditionally managed insurance. The need for private pension savings has not disappeared even though the right to a tax deduction is being removed. We aim to continue informing and educating our customers about the need for long-term savings, and to adapt our product range to meet this requirement. We continue to have great hopes that our business outside Sweden will show good growth and we will continue to focus on profitable growth in both Norway and Finland. ASSET MANAGEMENT Since 2009, Handelsbanken Liv s portfolio for policies invested in guaranteed interest solutions has been split into sub-portfolios based on the guarantee level, the policyholder s age and the tax bracket. Each sub-portfolio is managed in a linked asset portfolio. The assets are managed so that, based on the conditions for each sub-portfolio, they fulfil the company s insurance commitments to its customers. The sub-portfolios are allocated the yield rate generated by the respective portfolio, so that customers have different yield rates. The assets continue to be managed in diversified portfolios consisting chiefly of interestbearing securities, exchange-traded equity funds and alternative investments. Handelsbanken Liv s Board establishes the company s investment guidelines that define the overall frameworks for asset allocation. All portfolios are based on interest-bearing bonds. A small part is invested in other assets with a higher risk level. The proportion of assets, in addition to interest-bearing, varies over time and among the sub-portfolios. The management portfolios are divided into three main categories: insurance with an annual three per cent guarantee insurance with a three per cent final guarantee insurance with an annual five per cent guarantee. 4

6 administration report In the category with an annual three per cent guarantee, the average return for 2015 was +0.3 per cent (+4.4); for insurance with a three per cent final guarantee, -2.4 per cent (+5.8); and for insurance with an annual five per cent guarantee, it was +0.4 per cent (+5.2). For unit-linked and portfolio bond insurance savings, Handelsbanken Liv provides no guarantees in terms of value growth. Unit-linked insurance customers are primarily offered mutual funds managed by Handelsbanken Fonder for their investments. Portfolio bond customers may invest their premiums in mutual funds, equities, equity-linked bonds, bonds, certificates, warrants and options. In 2015, the growth in value for mutual funds with a high proportion of equities was positive, as it was for much portfolio bond insurance. SOLVENCY Following a lengthy period of regulatory development, Solvency II is coming into effect. The new regulations apply from 1 January In the second half of 2015, there was a great deal of activity aimed at finalising the regulations, in both the EU and Sweden. The fact that the regulations were not finalised until so late in the process has placed high demands on the companies that need to adapt to the new conditions. For example, the transitional regulations, with reporting for companies with both occupational pension insurance and other life insurance, have been unclear, making a wellplanned adaptation more difficult. Nevertheless, in 2015, Handelsbanken Liv continued the intensive work of adapting its operations to Solvency II. The boards and senior management of Handelsbanken Liv and SHB Liv Försäkrings AB held a number of seminars to discuss the impact of the regulations, the new conditions, future opportunities, etc. Policy documents and some processes were updated and adapted. During the year, capital requirements were calculated according to the standard formula, and the calculations were tested and adjusted. The new capital requirements have not led to any changes in the capital structure. Preliminary reporting to the Swedish Financial Supervisory Authority was carried out, and in accordance with the preliminary guidelines, for the second time, a Forward Looking Assessment of Own Risks (FLAOR) was carried out and reported to the Supervisory Authority. The Solvency II project has also been examined by Internal Audit and Compliance. Handelsbanken Liv will continue to work with further development in certain areas, and it is well-equipped for 2016, with the new Solvency II regulations. EMPLOYEES At the end of 2015, Handelsbanken Liv had 184 employees, with some 90 per cent of them employed in Sweden. Principles and processes for remuneration to senior management are presented in note 13, Operating expenses. CAREER DEVELOPMENT Handelsbanken takes a long-term view of its staff s employment. To attract and retain staff, there must be the right conditions for development at work through different career opportunities, and the employee s stage of life must be taken into consideration. For Handelsbanken Liv, competency is defined as an employee s ability to solve the tasks encountered in their daily work. At Handelsbanken Liv, employees therefore have a great deal of responsibility for their own competency development, but also for sharing this competency with their colleagues. All employees take part in their unit s business planning process. Guided by the business plan, employees meet their immediate superior at least once a year for a personal development dialogue, including a competency mapping. This involves discussing the employee s contribution to business goals and the conditions required for the employee to deal with their tasks. The discussion results in an individual action plan which is continuously followed up. GENDER EQUALITY AND DIVERSITY Handelsbanken Liv proceeds from the Handelsbanken s work with gender equality and diversity. Working with gender equality, diversity and an inclusive corporate culture is a fundamental part of Handelsbanken Liv s values and should also be a natural and integral part of the daily work. The goal is an equal opportunities company where men and women have the same opportunities and prerequisites to shape the Bank and their own professional career. To be a more equal company, we must challenge the traditional gender norms to ensure that everyone has the same opportunities for professional development. For example, employees who take parental leave have the same right to salary development as other staff. WORK ENVIRONMENT AND HEALTH Handelsbanken Liv complies with the Handelsbanken s work environment policy. The overall objective is for employees to enjoy good health, develop on a personal level and function in an optimum way. To achieve this goal, Handelsbanken Liv works with the following health factors: clear and honest communication, having the right conditions to perform tasks and deal with workrelated situations, feeling a sense of pride and confidence in one s work, respecting others, and being respected oneself. Health promotion activities are an important part of the work of achieving the work environment goal; the aim is to make employees more active. The company subsidises all forms of exercise approved by the Swedish Tax Agency, and provides a health promotion subsidy of SEK 2,000 per employee per year. ETHICAL STANDARDS Handelsbanken Liv complies with Handelsbanken s ethical guidelines, which state that operations must observe high ethical standards. Employees must conduct themselves in a manner that upholds confidence in the company. Handelsbanken s Board ratifies the ethical guidelines every year. A basic premise is that the operations and employees comply with the laws and regulations which govern the operations in various ways. Regulations and general guidelines from the Swedish Financial Super visory Authority and other authorities must be observed when drafting procedures and instructions. All employees have a clear responsibility for their actions, professionally and in social and ethical matters. The company s success depends on the confidence that public authorities and the general public have in it. ENVIRONMENTAL RESPONSIBILITY Handelsbanken Liv follows the decisions taken by its parent company, Handelsbanken, regarding environmental matters. Handelsbanken aims to promote long-term sustainable development, and seeks to minimise its environmental impact. This applies to both the direct environmental impact and the indirect impact that arises via asset investments. As in other areas at Handelsbanken, responsibility for practical environmental matters is decentralised. All managers in the Handelsbanken have primary responsibility for environmental matters at their units, and all employees have a responsibility for the environment as part of their duties. Handelsbanken has signed and complies with a number of voluntary agreements that are at the heart of our environmental activities. These include the ICC Guidelines for Sustain able Development, the United Nations Environmental Programme Finance Initiative (UNEP FI) Banks and the Environment, the UN s volutary initiative Global Compact, and the UN Principles for Responsible Investment (PRI). Handelsbanken also examines its major suppliers approach to sustainability, and environmental requirements must be made in all central procurements. To facilitate the drafting of supplier specifications, a template for supplier agreements has been produced, which also deals with how to specify environmental requirements. Environmental considerations are to be included in all investment and purchase decisions. 5

7 administration report ENVIRONMENTAL IMPACT Paper consumption is continually being reduced by channelling more e-communication via custom ers boxes. In addition, we continually co-ordinate our customer information to reduce the number of letters sent and the paper consumed, with lower CO 2 emissions. Waste separation at source is used fully. When rebuilding, the Bank recycles building materials wherever possible. Carbon dioxide emissions are an area where Handelsbanken Liv s operations have a direct impact on the environment. For many years, the Handelsbanken has measured carbon dioxide emissions generated by its operations. The direct impact mainly derives from the use of heating and electricity, as well as business travel. Handelsbanken Liv s CO 2 emissions are included in the emission figures published annually by Handelsbanken in its annual report and the Carbon Disclosure Project (CDP). RESPONSIBLE INVESTMENT ACTIVITIES For Handelsbanken Liv, a responsible operation is essential to long-term value creation on the capital markets. Investing our customers assets in a responsible manner is an important prerequisite for achieving our goals and generating a good long-term return. In addition, responsible investments are the foundation for being able to meet our customers requirements and wishes. Our objective is to offer our customers pension and security solutions that contribute to sustainable development in economic, environmental and social terms. Handelsbanken Liv s policy for responsible investments is based on international standards regarding the environment, human rights, working conditions, anticorruption and controversial weapons. Handelsbanken has signed the UN Global Compact, which summarises these standards and conventions. In addition, Handelsbanken has signed the UN Principles on Responsible Investment (PRI) which also provide guidance in matters of responsible investment at Handelsbanken Liv. For its management of insurance assets with guaranteed interest, Handelsbanken Liv engages Handelsbanken, which manages the assets as a discretionary assignment. At present, most of the assets are invested in interestbearing securities. In Handelsbanken Liv s unit-linked insurance products, most funds on offer are from Handelsbanken Fonder AB and Xact Kapitalförvaltning AB. Handelsbanken Fonder offers actively managed funds, with management based on fundamental research into markets and companies. Sustainability research takes place on a regular basis and is an integral part of the investment process. Handelsbanken Fonder excludes from all its funds companies that are involved in the production of weapons that are banned under international law, and companies that are involved in nuclear weapons, in accordance with Handelsbanken s guidelines for business relations with the armaments and defence industry. Handelsbanken Fonder also excludes companies that operate in mining and combustion of coal, as well as measuring and reporting the carbon footprint of most of its mutual funds. Active ownership is part of the long-term investment perspective, and in a large number of meetings with the companies in which its mutual funds are shareholders, Handelsbanken Fonder has dialogues on the challenges and opportunities of the companies sustainability work. By regularly analysing all its mutual funds, deviations from international norms and conventions can be detected, which leads to action in the form of a special dialogue, or divestment. Handelsbanken Fonder exercises its ownership role in the companies in which its mutual funds own shares the goal being the best possible growth in the companies long-term value. This occurs, for example, in matters concerning the composition of the companies boards and the procedure prior to and at shareholders meetings. Handelsbanken s subsidiary, Xact Kapitalförvaltning, offers index funds and exchangetraded funds (ETFs). All holdings in the funds are regularly examined by means of norm-based screening, where we identify companies which do not conform with Handelsbanken s fundamental values. In cases where companies systematically violate these standards, Xact Kapitalförvaltning takes action with the goal of achieving an improvement, principally by means of a dialogue with the purpose of influencing the company. Where possible, index funds exclude companies which are involved in controversial operations such as prohibited weapons, nuclear weapons or mining and combustion of coal. A decision to exclude a company is determined on the basis of whether it jeopardises the fund s ability to comply with the current fund regulations. This means that Xact Kapitalförvaltning can also exercise its ownership role by participating in, and voting at, annual general meetings. The Chief Executive of Handelsbanken Liv has ultimate responsibility for sustainability issues. Within the company there is a specially appointed person who monitors our compliance with the policy. This person is also a member of the company s committee for selecting our mutual funds within unit-linked insurance. CORPORATE GOVERNANCE structure At the start of 2015, in addition to the parent company Handelsbanken Liv, the Handelsbanken Liv comprised the wholly owned subsidiaries SHB Liv Försäkrings AB in Finland, and Handelsbanken Fastigheter AB. Savings insurance in Norway and Finland is sold via the subsidiary SHB Liv Försäkrings AB, while risk insurance in Norway and Finland continues to be sold through branches of the parent company Handelsbanken Liv. Handelsbanken Fastigheter AB conducts management of properties which are mainly rented by Handelsbanken and its subsidiaries. Handelsbanken Liv s unit-linked capital is principally invested in Handelsbanken s mutual funds offered by Handelsbanken Fonder AB. Handelsbanken Liv purchases services from its parent company Handelsbanken AB mainly IT services, insurance mediation, HR services, auditing and asset management. These are settled according to established internal prices at Handelsbanken, based on generally accepted transfer pricing principles according to the cost price principle but never exceeding the market price. Annual General Meeting 2015 The AGM was held on 24 April The Board The composition of the Board changed in 2015 following the election of Michael Green and Katarina Berner Frösdal as new members. The Board s activities The Board convened at eight ordinary board meetings. The Board regularly discusses the company s financial situation and its business and risk strategies in the short and long term. During the year, the Board studied quarterly reports from the Heads of Risk Control and Compliance. The Board was regularly updated during the year on the progress of Handelsbanken Liv s work to adapt to the forthcoming Solvency II regulations. 6

8 administration report management The management consists of the Chief Executive and Deputy Chief Executive, as well as the heads of a further five departments at Handelsbanken Liv. Details about the management are given on page 39. Auditors Anders Bäckström, Authorised Public Accountant, KPMG AB, is principal auditor for Handelsbanken Liv. Remuneration The company complies with the remuneration policy adopted by Handelsbanken Liv s Board, described in note 13, Operating expenses. Internal control and risk management Internal control is conducted within three lines of defence. The first line is managers and employees in the operations who perform controls in their areas of operation. The second line are the control functions Compliance, Risk Control and the Chief Actuary. The third line of defence is Internal Audit. All three lines of defence must produce control plans and an audit plan. The control plan describes what is to be checked, how this is to be done, and when the control must be performed. Checks are then performed based on the established control plan. All checks must be documented and archived. Checks are reported to various interested parties in accordance with instructions. The company has a low risk tolerance and a restrictive approach to risk, and therefore avoids high-risk transactions, even if they offer higher returns in the short term. It also constantly strives to reduce risk. The company must therefore have good control of the risks related to its operations, so that it can prevent unexpected or undesirable effects on financial performance and falls in value, while aiming for a low fluctuation in financial performance. In its risk management policy, the Board has classified three main types of risk: financial risks insurance risks operational risks. Handelsbanken Liv continually strives to measure, monitor and limit these risks for the entire, including subsidiaries. The company s risks and their impact on operations are presented in note 2, Risks and risk management. Risk Control The Risk Control unit has overall responsibility for ensuring that Handelsbanken Liv maintains good management and control of the various risks. The aim is to ensure via internal controls that operations comply with established goals and requirements. Risk Control is responsible for the overall internal reporting of all the Handelsbanken Liv s material risks at an aggregate level. This comprises financial and operational risks. The task of Risk Control is to identify, measure and monitor the company s risks, to inform the Chief Executive, company management and the Board about these risks, and to analyse their development. However, management of individual risks is the task of the operating unit that is responsible for the customer or counterparty, or is responsible for conducting a certain transaction. The risk control officer reports directly to the Chief Executive and the Board. Compliance The Compliance unit must ensure that laws, regulations and internal rules, as well as accepted business practices and norms, are complied with in the Handelsbanken Liv s operations. The function must check and monitor the application of the current regulations and inform the units concerned about any risks that may arise in the operations as a result of inadequate compliance, assist in identifying and assessing such risks, and assist in drafting internal regulations. The Compliance unit is an independent control function with responsibility for ensuring good administrative order in Handelsbanken Liv s operations. Its objective is to ensure that the company meets these aims by using its riskbased working method identifying, assessing, reporting and monitoring compliance risks. The Compliance unit has functional responsibility for compliance. The compliance officer reports regularly to the Chief Executive and the Board in matters regarding compliance. Actuary function The actuary function is a control function that is independent of the operations that it monitors. The function is responsible for assessing the adequacy of the technical provisions, verifying the solvency capital requirement calculations that have been carried out, and checking that the calculations have been carried out in accordance with prevailing regulations. The function is also responsible for giving its opinion on the policy documents related to taking out insurance and reinsurance. The purpose of the actuary function is to ensure, through its verification work, that the company has sufficient capital to cover its commitments, given the insurance contracts that it has entered into and the associated risks. A further purpose is to prevent sanctions and financial losses as a result of inadequate compliance regarding the calculation of technical provisions and solvency capital requirements. The actuary function reports directly to the Chief Executive and the Board. The actuary function consists of the Chief Actuary. Internal Audit The life insurance company has, through an agreement, sub-contracted to Handelsbanken s central audit unit to run the company s internal audit function. Internal Audit performs an independent, impartial audit of the operations and financial reporting of Handelsbanken Liv, based on requirements set in internal and external regulations. A central task for Internal Audit is to assess and verify processes for risk management, internal governance and control. The annual planned auditing assignments are documented in an audit plan which is adopted by the Board of the company. Following audit calls, a written report is submitted to the audited units and departments. Internal Audit compiles an annual report for the whole company which is submitted to the company s Chief Executive. The annual report is also presented to the company s Board. 7

9 Five-year overview Five-year overview Profit/loss according to the alternative income statement Administration result Risk result Financial result Other result Profit before appropriations and tax Profit/loss according to the statutory income statement Premiums written Net investment income in insurance business 789 1, ,260 1,338 Claims incurred Operating expenses Balance on the technical account, life insurance business Profit for the year Financial position Property 3,713 3,733 3,762 3,794 1,140 Shares and participating interests 876 1,343 1,078 1,358 1,229 Bonds and other interest-bearing securities 7,043 8,130 9,094 9,744 11,529 Derivatives Other investment assets 1,952 5,071 4, Total investment assets 13,590 18,277 18,254 14,911 14,080 Investments for which the policyholder bears the risk 101,724 91,739 76,817 63,714 55,892 Unit-linked commitments 82,464 73,761 60,168 48,610 41,314 Conditional bonus for portfolio bond insurance 19,260 17,978 16,649 15,104 14,578 Provisions for life insurance and conditional bonuses 9,064 10,215 10,933 11,866 13,627 Equity 9,309 8,549 7,731 7,031 4,211 Provisions for taxes Subordinated loans 1,129 1,129 1,129 1,129 1,129 Total solvency capital 10,438 9,752 8,860 8,188 5,340 Available solvency margin for the insurance group 7,424 6,554 6,959 5,646 2,557 Required solvency margin for the insurance group ,024 Solvency ratio Key figures Management expense ratio, % Total return, savings insurance with a guaranteed annual rate of 3%, average for the category Total return, savings insurance with a guaranteed final rate of 3%, average for the category Total return, savings insurance with a guaranteed annual rate of 5%, average for the category Premiums paid Guaranteed interest Risk insurance Life insurance management Unit-linked insurance 9,809 8,246 7,334 6,167 10,386 Portfolio bond insurance 3,891 2,438 2,253 1,839 2,533 Total 14,345 11,384 10,372 8,772 14,024 Assets under management Guaranteed interest 8,348 9,407 10,145 11,102 12,863 Life insurance management Unit-linked insurance 82,464 73,761 60,168 48,610 41,314 Portfolio bond insurance 19,260 17,978 16,649 15,104 14,578 Total 110, ,748 87,576 75,399 69,329 Collective consolidation ratio is not stated since it is not a relevant indicator for a profit-distributing life insurance company. Direct yield is not stated since it does not provide a fair picture. Instead, total return is stated which includes both direct yield and changes in value. 8

10 Five-year overview Five-year overview Profit/loss according to the alternative income statement Administration result Risk result Financial result Other result Profit before appropriations and tax Profit/loss according to the statutory income statement Premiums written Net investment income in insurance business 728 1, ,322 Claims incurred Operating expenses Balance on the technical account, life insurance business Profit for the year Financial position Property ,140 Shares and participating interests 4,108 4,573 4,776 5,056 1,727 Bonds and other interest-bearing securities 7,043 8,130 9,094 9,302 10,987 Derivatives Other investment assets 2,247 5,416 4, Total investment assets 13,404 18,119 18,695 15,032 14,033 Investments for which the policyholder bears the risk 95,335 86,481 73,021 60,942 38,930 Unit-linked commitments 76,075 68,503 56,372 45,838 38,930 Conditional bonus for portfolio bond insurance** 19,260 17,978 16,649 15,104 - Provisions for life insurance and conditional bonuses 9,064 10,215 10,933 11,866 13,627 Equity 8,985 8,341 7,556 6,933 4,009 Provisions for taxes Subordinated loans 1,129 1,129 1,129 1,129 1,129 Total solvency capital 10,114 9,522 8,685 8,075 5,138 Available solvency margin 7,278 6,482 6,851 5,544 2,380 Required solvency margin ,006 Solvency ratio Key figures Management expense ratio, % Total return, savings insurance with a guaranteed annual rate of 3%, average for the category Total return, savings insurance with a guaranteed final rate of 3%, average for the category Total return, savings insurance with a guaranteed annual rate of 5%, average for the category Premiums paid Guaranteed interest Risk insurance Life insurance management Unit-linked insurance 8,225 6,926 6,315 5,696 10,023 Portfolio bond insurance* 3,891 2,438 2, Total 12,761 10,064 9,353 6,604 11,174 Assets under management Guaranteed interest 8,348 9,407 10,145 11,102 12,863 Life insurance management Unit-linked insurance 76,075 68,503 56,372 45,838 38,930 Portfolio bond insurance* 19,260 17,978 16,649 15,104 - Total 104,214 96,490 83,780 72,627 52,367 * Portfolio bond insurance is a new management form in the parent company from Collective consolidation ratio is not stated since it is not a relevant indicator for a profit-distributing life insurance company. Direct yield is not stated since it does not provide a fair picture. Instead, total return is stated which includes both direct yield and changes in value. 9

11 Financial reports Alternative income statement The traditional income statement in a life insurance company is normally difficult to understand and analyse. Handelsbanken Liv has therefore produced an alternative income statement to make it easier to understand how the results arise and develop Administration result Risk result Financial result Other result Profit before tax The profit/loss is based on the Handelsbanken Liv s profit/loss before tax Link to statutory income statement Profit before tax Taxes Profit for the year Administration result Fee income Other income 2 2 Net fee and commission income Expenses Total The administration result is the difference between the fees charged on the insurance and the company s expenses. 2 Risk result Premiums written Change of claims outstanding 7 43 Insurance claims paid Result of reinsurance -3-9 Other 15-2 Total The risk result is the difference between the fees which the company charges to cover the insurance risks (mortality, longevity, morbidity and accident) and the actual cost of these. 3 Financial result Capital contribution Other Total The insurance capital is managed in several separate sub-groups, each with an individual investment strategy so that the returns yielded are allocated to the policyholders in each of the respective sub-groups. Any yield split for the company is also calculated separately for each portfolio. This is reported under the Other heading. 4 Other result Return on equity Interest expense on subordinated loans Profit/loss Handelsbanken Fastigheter AB Total

12 Financial reports Income statement Technical account, life insurance business Premiums written (net of reinsurance) Note Investment income Note 8 1,110 1,262 1,049 1,221 Unrealised gains on investment assets Note Increase in value of investment assets for which the policyholder bears the investment risk: Assets for conditional bonus 760 1, ,526 Unit-linked insurance assets 4,462 9,513 4,004 9,105 Other technical income Note Claims incurred (net of reinsurance) Note Changes in other technical provisions Note 12-5,636-11,800-5,157-11,382 Operating expenses Note Investment charges Note Unrealised losses on investment assets Note Decrease in value of investment assets for which the policyholder bears the investment risk: Assets for conditional bonus Unit-linked insurance assets Other technical expenses Investment income transferred to financial operations Balance on the technical account, life insurance business Non-technical account Balance on the technical account, life insurance business Investment income Note Unrealised gains on investment assets Note Investment income transferred from insurance operations Investment charges Note Unrealised losses on investment assets Note Profit before appropriations and tax Appropriations Profit before tax Taxes Note Profit for the year Statement of comprehensive income Profit for the year Other comprehensive income Items that cannot be reclassified into profit or loss Defined benefit pension plans Items that can be reclassified into profit or loss Translation differences for the year Total other comprehensive income Total comprehensive income for the year

13 Financial reports Analysis of results Direct insurance of Swedish risks Direct Occupational pension insurance Other life insurance insurance of foreign risks Received reinsurance Technical account, life insurance business Total 2015 Defined contribution traditional insurance Unit-linked insurance Occupational linked disability insurance and premium waiver insurance Individual traditional life Unit-linked insurance insurance Non-cancellable disability and accident insurance and premium waiver insurance life and occupational group life insurance Premiums written (net of reinsurance) Investment income 1, Unrealised gains on investment assets Increase in value of investment assets for which the policyholder bears the investment risk, portfolio bond Increase in value of investment assets for which the policyholder bears the investment risk 4,004-1, , Other technical income Claims incurred (net of reinsurance) Change in other technical provisions -5, , ,008-2, Operating expenses Investment charges Unrealised losses on investment assets Investment income transferred to financial operations Balance on the technical account, life insurance business PREMIUMS WRITTEN Premiums written (gross) Premiums ceded Total premiums written (net of reinsurance) CLAIMS INCURRED Insurance claims paid Gross of reinsurance Reinsurers share Change in provision for claims outstanding Gross of reinsurance Reinsurers share Total claims incurred (net of reinsurance) Technical provisions 31 December 2015 Provisions for life insurance 8,003 5, , Provision for claims outstanding ,411 5, , Technical provisions for which the policyholder bears the risk 31 December 2015 Conditional bonus 1, Conditional bonus for portfolio bond insurance commitments 19, , Unit-linked commitments 76,075-42, , , ,860-19,958 33, Reinsurers share of technical provisions Claims outstanding

14 Financial reports Balance sheet assets Assets Intangible assets Goodwill Note Other intangible assets Note Investment assets Property Note 21 3,713 3, Shares and interests in companies Note ,234 3,234 Shares and participating interests Note , ,339 Bonds and other interest-bearing securities Note 24 7,043 8,130 7,043 8,130 Other loans Note 25 1,952 5,071 2,247 5,416 Derivatives Note ,590 18,277 13,404 18,119 Investment assets for which the policyholder bears the investment risk Conditional bonus for portfolio bond insurance Note 33 19,260 17,978 19,260 17,978 Unit-linked insurance assets Note 34 82,464 73,761 76,075 68, ,724 91,739 95,335 86,481 Reinsurers share of technical provisions Claims outstanding Receivables Tax claims Note Other receivables Note Other assets Property and equipment Note Liquid funds Note 29 6,657 2,236 6,430 2,088 6,657 2,237 6,430 2,089 Prepaid expenses and accrued income Accrued interest income Other prepaid expenses and accrued income Total assets 122, , , ,057 The items Intangible assets, Property and equipment, Other loans and most of the Bonds and other interest-bearing securities have a longer life than one year. Other items expire within one year. 13

15 Financial reports Balance sheet liabilities Equity, provisions and liabilities Equity Share capital (100,000 shares) Statutory reserve Defined benefit pension plans Translation reserve Retained earnings 8,446 7,633 8,224 7,442 Profit for the year Total equity 9,309 8,549 8,985 8,341 Subordinated liabilities Perpetual subordinated loan 1,129 1,129 1,129 1,129 Actuarial provisions (gross of reinsurance) Provision for life insurance Note 30 8,003 8,778 8,003 8,778 Provision for claims outstanding Note ,411 9,198 8,411 9,198 Technical provisions for life insurance for which the policyholder bears the risk Conditional bonus Note 32 1,061 1,437 1,061 1,437 Conditional bonus for portfolio bond insurance commitments Note 33 19,260 17,978 19,260 17,978 Unit-linked commitments Note 34 82,464 73,761 76,075 68, ,785 93,176 96,396 87,918 Provisions for other risks and charges Provisions for taxes Note Deposits from reinsurers Liabilities Liabilities referring to reinsurance Derivatives Note Net pension liabilities Note Other liabilities Note Accrued expenses and deferred income Other accrued expenses and deferred income Note Total equity, provisions and liabilities 122, , , ,057 The items Perpetual subordinated loan, Provisions for life insurance, Conditional bonus and Unit-linked commitments have a longer life than one year. Other items expire within one year. 14

16 Financial reports Statements of changes in equity Share capital Translation reserve Retained earnings Total Opening equity ,640 7,731 Profit for the year Other comprehensive income Total change before transactions with the owners Shareholder contribution received - Total transactions with the owners - Closing equity ,449 8,549 Opening equity ,449 8,549 Profit for the year Other comprehensive income Total change before transactions with the owners Shareholder contribution received - Total transactions with the owners - Closing equity ,220 9,309 The translation reserve is composed entirely of the effects of changed exchange rates when translating foreign operations financial reports to the currency of the consolidated accounts. Share capital Statutory reserve Translation reserve Retained earnings Total Opening equity ,442 7,556 Profit for the year Other comprehensive income 3 3 Total change before transactions with the owners Shareholder contribution received - Total transactions with the owners - Closing equity ,224 8,341 Opening equity ,224 8,341 Profit for the year Other comprehensive income -5-5 Total change before transactions with the owners Shareholder contribution received - Total transactions with the owners - Closing equity ,873 8,985 The translation reserve is composed entirely of the effects of changed exchange rates when translating foreign operations financial reports to the currency of the parent company s accounts. 15

17 Financial reports Cash flow statement OPERATING ACTIVITIES Profit before tax Adjustment for non-cash items in profit/loss: Depreciation, amortisation and impairments Unrealised gains/losses on investment assets Liquidation profit Paid income tax Changes in the assets and liabilities of operating activities: Net investment assets 4, , Conditional bonus Provisions for life insurance Unit-linked insurance assets -9,985-14,922-8,854-13,460 Unit-linked commitments 9,985 14,922 8,854 13,460 Other assets Other liabilities Other comprehensive income Cash flow from operating activities 4, , INVESTING ACTIVITIES Liquidation capital Writedown shares in subsidiary Investment in tangible non-current assets Investment in intangible non-current assets Cash flow from investing activities FINANCING ACTIVITIES Shareholder contribution Cash flow from financing activities Cash flow for the period 4, , Liquid funds at beginning of period Note 29 2,236 1,940 2,088 1,776 Cash flow from operating activities 4, , Cash flow from investing activities Cash flow from financing activities Liquid funds at end of period 6,657 2,236 6,430 2,088 Investment assets Property Note 21 3,713 3, Shares and participating interests Note 22, ,343 4,108 4,573 Bonds and other interest-bearing securities Note 24 7,043 8,130 7,043 8,130 Derivatives Note Other loans Note 25 1,952 5,071 2,247 5,416 Net investment assets 13,590 18,277 13,404 18,119 Information concerning interest paid and received Interest received during the period Interest paid during the period Total In addition to paid income tax of SEK -96 million (96) in the parent company and SEK -185 million (66) in the, SEK 256 million (360) has been paid in and out for yield tax. See note 35, Taxes. 16