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

Transcription

1 Annual Report 2014

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 37 AUDITOR S REPORT 38 BOARD AND MANAGEMENT 39 GLOSSARY 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 The Chief Executive s comments Handelsbanken Liv s very solid growth was maintained in The competitive offering that we laid the foundations for a couple of years ago has proved successful and has helped to boost our business. This applies particularly to the area of occupational pensions, where Handelsbanken s corporate customers are increasingly choosing Handelsbanken Liv to provide their employees occupational pensions. A couple of years ago, Handelsbanken decided to focus on helping its corporate customers in providing one of the market s most competitive occupational pension offerings to their employees. We developed a stronger offering and decided to reduce the fee for our offering aimed at high earners, a pension solution which involves no asset fees or premium fees. The new offering and its attractive pricing received a great deal of attention from our corporate customers, who are increasingly finding it a natural step to extend their business with the Bank to include occupational pensions for their employees. Other parts of our offering have also maintained their strong performance over the past year. PLEASING TO SEE GROWTH IN OUR PENSIONS BUSINESS Handelsbanken s mutual funds continue to be ranked highly, and all customers with unit-linked insurance can look back on another successful year. The returns on our equity funds have been particularly strong. The independent fund rating company Morningstar has once again given our funds the highest three-year rating among the major Swedish banks. Our premiums written grew by ten per cent during the year, which was attributable to increasing flows in unit-linked and portfolio bond insurance. New sales during the year increased by 14 per cent, and for occupational pensions, growth was 40 per cent. Assets under management rose by 16 per cent to a total of SEK 102 billion at year-end. In 2014, the return on our traditionally manag ed policies improved from the previous year. Assets in our traditional holdings are predominantly invested in the fixed income market. Interest rates fell sharply during the year, which caused the value of the holdings to increase, and the majority of portfolios were therefore able to achieve their guaranteed return. MORE SATISFIED CUSTOMERS Managing our customers pensions is a responsible task, and at Handelsbanken we have a long tradition of strong results when customers give their opinions on the banking and insurance sector in Sweden. It is pleasing to note that our customers were more satisfied in 2014 than in 2013, and they regard our customer service and offering as one of the strongest in the market. ARE SWEDES SAVING ENOUGH? Too many people are saving far too little, as a number of surveys have made clear over the past year. There may be many reasons for the low savings. One is the low interest rates which mean that traditional bank savings do not feel particularly attractive. Another is the uncertain economic situation in many parts of the world, resulting in fluctuating share prices, which may have deterred some people from saving in equities and funds. Surveys show that in the future, retired people will have to manage with an income reduction of almost 50 per cent when they move from their salary to their pension, even if they have an occupational pension. So the need for private pension savings is increasing and as individual savers, we bear an increasing responsibility for our own pensions. At the same time, many people consider the responsibility for a future pension to be complex and demanding, and are worried that they have not found out enough about this area. One thing is clear: the state pension, as a proportion of the final salary, will decline every year that passes. WHAT WILL LOWER TAX-DEDUCTION RIGHTS MEAN FOR OUR PRIVATE PENSION CUSTOMERS? In 2014, it was decided that tax-deduction rights for private pension savings in Sweden will cease as from 2016 (with a tax-deduction en titlement of SEK 1,800 in 2015), and many of our customers are considering how best to save towards their pensions. The foundation of a good pension is made up of the national retirement pension and an occupational pension, which most people have. When you then select a method to supplement this with your own savings, an excellent idea is to visit the website minpension.se to make your own pension fore- 2 HANDELSBANKEN LIV ANNUAL REPORT 2014

4 The Chief Executive's comments cast. Are you satisfied with the figures there, or does something need to be added? For those of us who work in the life insurance sector, it s important that we do all we can to help to inform people about pension savings, and the need for the great majority of Swedes to have supplementary savings, so that they are able to maintain their desired standard of living when they reach the end of their working lives. Many companies also choose to offer their employees the opportunity to exchange salary for pension (i.e. salary sacrifice). We are seeing growing demand for this from our corporate customers, as a result of the lower tax-deduction rights for pension savings. Handelsbanken has various alternatives for long-term pension savings: an investment savings account for those who wish to have simple, cheap, non-restricted savings, or our new product Kapitalspar Pension for those who prefer earmarked pension savings with a fixing period and the option of monthly disbursements. Louise Sander Stockholm, March 2015 HANDELSBANKEN LIV ANNUAL REPORT

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. Significant events during the year The Ireland-based subsidiary, Handels banken Ltd, was liquidated during the year, according to plan. Financial performance Assets managed at year-end were SEK 102 billion (88). The positive net flow for unit-linked insurance continued in 2014 and amounted to SEK 4.4 billion (3.9). Assets managed in unitlinked insurance rose by SEK 14 billion to SEK 74 billion (60) due to the net flow, but also to positive value growth during the year. For portfolio bond insurance, the net flow was negative at SEK -0.3 billion (-0.4). Nevertheless, assets managed in portfolio bond insurance rose by just over 8 per cent to SEK 18 billion (17) due to positive value growth. Assets in insurance with guaranteed interest fell from SEK 10 billion at the start of the year to SEK 9 billion at year-end; the net flow thus totalled SEK -1.1 billion (-1.2). Profit before tax was SEK 857 million (642). The increase is due to rising commission income combined with an improved financial result, at the same time as the risk result also continued to rise. Expenses were more or less unchanged between the years. For most policyholders, returns in traditionally managed portfolios were on a par with the guaranteed rate and the company therefore received a small yield split on 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 entire amount at the disposal of the AGM SEK 8,221,226,628 be 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. In 2014, Handelsbanken Liv continued developing its business for insurance paid by companies. New sales of occupational pensions increased during the year by 40 per cent (53) and this offering has continued to improve. In December, the Swedish Riksdag passed the budget for the next year which included a proposal for a reduced, and eventually abolished, right of tax deduction for pension savings. The uncertainty surrounding the decision and its content, coupled with the short period in which to plan this, has put considerable pressure on the organisation. A large, important group of customers needed to be informed very quickly and receive advice about their future pension savings and insurance protection. New sales of collective agreement occupational pensions fell during the year, partly due to the fact that, as of 1 July 2013, we are not available as an option for ITP, private sector salaried employees. Large parts of the occupational pension area were also more or less unavailable at times in The SAF-LO area was opened in May and KAP-KL became available again in September. In 2014, we transferred SEK 1.7 billion into the company, as compared to SEK 1.4 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. In early 2014, the Swedish Pensions Agency started a campaign called Forecast for everyone with the aim of getting more people to make a pensions forecast on the My pension website (minpension.se), and draw attention to the need to save for their pension. Sales of endowment insurance continue to improve. Both companies and private individuals are taking out this type of insurance. The 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 are improving in the Finnish subsidiary. Premiums written increased by just over 20 per cent (112), expressed in local currency. 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 tax subsidy 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 focus on profitable growth in both Norway and Finland during the year ahead. 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. 4 HANDELSBANKEN LIV ANNUAL REPORT 2014

6 Administration report 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. In the category with an annual three per cent guarantee, the average return for 2014 was +4.4 per cent (+1.9); for insurance with a three per cent final guarantee, +5.8 per cent (+2.7); and for insurance with an annual five per cent guarantee, it was +5.2 per cent (+2.5). 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 2014, the growth in value for mutual funds with a high proportion of equities was positive, and also for much portfolio bond insurance. SOLVENCY In 2014, negotiations were completed regarding the Omnibus II directive which was adopted in April. As a result of the adoption of Omnibus II, it was finally confirmed that Solvency II will be applied as of 1 January The work with the Solvency II regulations was intensive at all levels during the year. After several published versions, on 10 October, the Commission adopted the delegated acts as a regulation. The Council and the European Parliament then announced that they support this regulation, which means that it will come into force. Activity has been high at the European Insurance and Occupational Pensions Authority (EIOPA). Consultations have been in progress during 2014 regarding guidelines and the implementation standards (ITS), and this will continue in EIOPA has submitted completed proposals for the implementation standards to the Commission, which then has three months to approve them. If the Commission does not approve ITS, or makes amendments, it will go back to EIOPA, which will have six weeks in which to make any changes in its proposals, before resending them to the Commission. As regards the guidelines that have been adopted, these must be translated. After this, the national supervisory authorities have two months in which to state whether they will comply with these or not. In November, EIOPA also held a consultation about the very important issue of the discount rate. In Sweden, harmonisation with the regulations has continued. The Ministry of Finance sent a draft proposal to the Council on Legislation for consideration. The sector organisation s response to this was submitted in late November. The Swedish Financial Supervisory Autho rity has sent out draft regulations, and has organised reference group meetings to discuss these. In 2014, Handelsbanken Liv continued to adapt its operations to Solvency II. The boards in Sweden and Finland have held a number of seminars, to discuss the impact of the regulations, the role of the board, future opportunities, etc. The project has carried out an overall test, to ascertain what work remains to be done, and to ensure the continuation of an effective adaptation ahead of The project has also been examined by Internal Audit. In accordance with the preliminary guidelines, an initial Forward Looking Assessment of Own Risks (FLAOR) has been carried out and reported to the Swedish Financial Supervisory Authority. The work will continue in 2015, according to an established internal timetable. EMPLOYEES At the end of 2014, Handelsbanken Liv had 179 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, it must provide the right conditions for development at work, different career opportunities and take into consideration the employee s stage of life. For Handelsbanken Liv, competence refers to 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 competence development, but also for sharing that competence with their colleagues. All employees take part in their unit s business planning process. Guided by the business plan, employees meet their immediate superior for a personal development dialogue at least once a year. 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 Handelsbanken Liv complies with the Handelsbanken s gender equality policy, which states that equal conditions must apply to men and women regarding career development within the. 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. Working with gender equality is part of the daily work for managers and employees alike. To be a more equal company, we must challenge the traditional gender norms to ensure that everyone has the same opportunities for professional development. 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 work-related situations, feeling a sense of pride and confidence in one s work, respecting others, and being respected oneself. Health promotion activities are an important factor in staff care and health care. The aim is to make employees more active. The company subsidises all forms of exercise approved by the Swedish Tax Agency. 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 HANDELSBANKEN LIV ANNUAL REPORT

7 Administration report operations and employees comply with the laws and regulations which govern the operations in various ways. Directives and general recommendations from the Swedish Financial Supervisory 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 of the public and authorities. ENVIRONMENTAL RESPONSIBILITY Handelsbanken Liv follows the decisions taken by its parent company, Handelsbanken, regarding environmental matters. Handelsbanken aims to promote long-term sustainable development. 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. Environmental matters are a vital element of the Handelsbanken s operations, in terms of the direct environmental impact of the Bank s operations as well as any indirect impact. Handelsbanken also examines its major suppliers approach to sustainability. When making purchases, the Bank must make enquiries as to whether suppliers have collective agreements, and have policies regarding work environment and giving and taking bribes. Handelsbanken has signed and complies with a number of voluntary agreements that are at the heart of our environmental activities. These include the ICC Business Charter for Sustainable Development and the United Nations Environment Programme Finance Initiative (UNEP FI), Banks and the Environment. UNEP FI states that economic development must be compatible with social welfare and a sound environment. Environmental considerations are included in all investment and purchase decisions. To facilitate drafting of supplier specifications, a template for supplier agreements has been produced, which also deals with how to specify environmental requirements. Paper consumption is reduced by channelling more communication via customers boxes. ENVIRONMENTAL IMPACT 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 business travel, heating and electricity. Waste separation at source was introduced in 2006 and has been fully implemented since We continually co-ordinate our customer information to reduce the number of letters sent. When rebuilding, the Bank recycles building materials wherever possible. RESPONSIBLE INVESTMENT ACTIVITIES Through active ownership, Handelsbanken Liv aims to help create sustainable development in economic and social terms, and considers that a responsible attitude is essential to long-term value creation in a company. Responsible investments are therefore a vital prerequisite for achieving the company s goal of generating good long-term returns. Handelsbanken Liv also regards responsible investments as a prerequisite for meeting customer demands. Handelsbanken Liv s guidelines for responsible investments are based on international standards for the environment, human rights and working conditions, corruption, and banned weapons. These are expressed in the UN s conventions and agreements and can then be applied to a company s environmental and social responsibility. The UN Principles of Responsible Investment (PRI) also provide guidance regarding responsible investment. The guidelines are reviewed annually and can then be revised to take account of changes in the market or in customer requirements. The guidelines cover direct investments made by funds and portfolios in Swedish and foreign equities and corporate bonds. For indirect investments such as holdings in funds, structured products and derivatives, the guidelines should be applied to as many investments as possible. For fund-of-fund management, they apply to the part of the portfolio comprising funds managed internally. Index funds managed passively are not covered by the guidelines, but their holdings are used to exert influence on companies with which Handelsbanken Liv, through its fund manager, has chosen to maintain a dialogue as an active owner. The company also offers index funds with the objective of complying with customers specific requirements to exclude companies in certain industries. For its insurance capital relating to management with guaranteed return, Handelsbanken Liv engages Handelsbanken Fonder AB, in the form of Handelsbanken Asset Management. In Handelsbanken Liv s unit-linked insurance products, most funds on offer are from Handelsbanken Fonder AB. CORPORATE GOVERNANCE structure At the start of 2014, in addition to the parent company Handelsbanken Liv, the Handelsbanken Liv comprised the wholly owned subsidiaries SHB Liv Försäkrings AB in Finland, Handelsbanken Fastigheter AB, and Handelsbanken Life & Pension Ltd in Ireland, which was being liquidated. 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. Until the end of 2012, Handelsbanken Life & Pension Ltd provided Handelsbanken Liv s portfolio bond products. At the year-end 2012/2013, all portfolio bond insurance was transferred from Handelsbanken Life & Pension Ltd to the parent company, Handelsbanken Liv. After the transfer, Handelsbanken Life & Pension Ltd no longer conducted any insurance operations. In spring 2013, the insurance concession in Ireland was deregistered. The company s name was changed to Handelsbanken Ltd and it was put into liquidation. In the summer of 2014, the liquidator submitted the final accounts and the company was deregistered. 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 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. 6 HANDELSBANKEN LIV ANNUAL REPORT 2014

8 Administration report Annual General Meeting 2014 The AGM was held on 28 April Board The composition of the Board changed in the year following the election of Anders Ohlner as a new member. The Board s activities The Board convened at nine ordinary board meetings. The Board regularly discusses the company s financial situation and its short-term and long-term strategy. In 2014, the Board was regularly updated on the progress of Handelsbanken Liv s work to adapt to the forthcoming Solvency II regulations. management The management consists of the Chief Executive and Deputy Chief Executive and the management of departments at Handelsbanken Liv, a total of nine individuals. Details about the management are given on page 39. Auditors Anders Bäckström, authorised public accountant, is principal auditor for KPMG AB. 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 is the control functions Compliance, Independent 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, thus preventing 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. Independent risk control The independent 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 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 checking 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. Chief Actuary The Chief Actuary is responsible for checking the risk result and risk exposure of insurance risks, as well as checking technical provisions. This responsibility also entails checking the company s reinsurance, and approving reports to be sent to public authorities. The Chief Actuary informs the Board about the risk result at every Board meeting, and submits an actuary s annual report every year. The actuary function comprises the Chief Actuary, the Head of Product Owners and actuaries. 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. After 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. HANDELSBANKEN LIV ANNUAL REPORT

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 1, ,260 1,338 1,011 Claims incurred Operating expenses Balance on the technical account, life insurance business Profit for the year Financial position Property 3,733 3,762 3,794 1,140 1,260 Shares and participating interests 1,343 1,078 1,358 1,229 2,101 Bonds and other interest-bearing securities 8,130 9,094 9,744 11,529 16,444 Derivatives Other investment assets 5,071 4, Total investment assets 18,277 18,254 14,911 14,080 19,849 Investments for which the policyholder bears the risk 91,739 76,817 63,714 55,892 55,605 Unit-linked commitments 73,761 60,168 48,610 41,314 39,562 Conditional bonus for portfolio bond insurance 17,978 16,649 15,104 14,578 16,044 Provisions for life insurance and conditional bonuses 10,215 10,933 11,866 13,627 19,497 Equity 8,549 7,731 7,031 4,211 3,786 Provisions for taxes Subordinated loans 1,129 1,129 1,129 1,129 1,129 Total solvency capital 9,752 8,860 8,188 5,340 4,915 Own funds for the insurance group 6,554 6,959 5,646 2,557 3,581 Required solvency margin for the insurance group ,024 1,183 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 8,246 7,334 6,167 10,386 9,312 Portfolio bond insurance 2,438 2,253 1,839 2,533 3,630 Total 11,384 10,372 8,772 14,024 14,694 Assets under management Guaranteed interest 9,407 10,145 11,102 12,863 18,896 Life insurance management Unit-linked insurance 73,761 60,168 48,610 41,314 39,562 Portfolio bond insurance 17,978 16,649 15,104 14,578 16,044 Total 101,748 87,576 75,399 69,329 74,922 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 HANDELSBANKEN LIV ANNUAL REPORT 2014

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 1, , Claims incurred Operating expenses Balance on the technical account, life insurance business Profit for the year Financial position Property ,140 1,260 Shares and participating interests 4,573 4,776 5,056 1,727 2,618 Bonds and other interest-bearing securities 8,130 9,094 9,302 10,987 15,930 Derivatives Other investment assets 5,416 4, Total investment assets 18,119 18,695 15,032 14,033 19,847 Investments for which the policyholder bears the risk 86,481 73,021 60,942 38,930 36,944 Unit-linked commitments 68,503 56,372 45,838 38,930 36,944 Conditional bonus for portfolio bond insurance* 17,978 16,649 15, Provisions for life insurance and conditional bonuses 10,215 10,933 11,866 13,627 19,497 Equity 8,341 7,556 6,933 4,009 3,647 Provisions for taxes Subordinated loans 1,129 1,129 1,129 1,129 1,129 Total solvency capital 9,522 8,685 8,075 5,138 4,776 Own funds 6,482 6,851 5,544 2,380 3,463 Required solvency margin ,006 1,172 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 6,926 6,315 5,696 10,023 8,862 Portfolio bond insurance* 2,438 2, Total 10,064 9,353 6,604 11,174 10,614 Assets under management Guaranteed interest 9,407 10,145 11,102 12,863 18,896 Life insurance management Unit-linked insurance 68,503 56,372 45,838 38,930 36,944 Portfolio bond insurance* 17,978 16,649 15, Total 96,490 83,780 72,627 52,367 56,260 * 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. HANDELSBANKEN LIV ANNUAL REPORT

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 9 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 Insurance claims paid Result of reinsurance -9-5 Other Total Financial result Capital contribution Other 31-6 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 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. 10 HANDELSBANKEN LIV ANNUAL REPORT 2014

12 Financial reports Income statement Technical account, life insurance business Premiums written (net of reinsurance) Note Investment income Note 8 1,262 1,113 1,221 1,079 Unrealised gains on investment assets Note Increase in value of investment assets for which the policyholder bears the investment risk: Assets for conditional bonus 1,526 1,885 1,526 1,885 Unit-linked insurance assets 9,513 8,095 9,105 7,706 Other technical income Note Claims incurred (net of reinsurance) Note Changes in other technical provisions Note 12-11,800-10,655-11,382-10,252 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 HANDELSBANKEN LIV ANNUAL REPORT

13 Financial reports Analysis of results Technical account, life insurance business Total 2014 Occupational pension insurance Definedcontribution traditional insurance Unit-linked insurance Direct insurance of Swedish risks Occupational linked disability insurance and premium waiver insurance Individual traditional life Unit-linked insurance insurance Other life insurance Noncancellable disability and accident insurance and premium waiver insurance life and occupational group life insurance Direct insurance of foreign risks Received reinsurance 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 1, , Increase in value of investment assets for which the policyholder bears the investment risk 9,105-5, , Other technical income Claims incurred (net of reinsurance) Change in other technical provisions -11, , ,817-3, 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 2014 Provisions for life insurance 8,778 5, , Provision for claims outstanding ,198 5, , Technical provisions for which the policyholder bears the risk 31 December 2014 Conditional bonus 1, Conditional bonus for portfolio bond insurance commitments 17, , Unit-linked commitments 68,503-38, , ,918 1,119 38,638-18,296 29, Reinsurers share of technical provisions Claims outstanding HANDELSBANKEN LIV ANNUAL REPORT 2014

14 Financial reports Balance sheet assets Assets Intangible assets Goodwill Note Other intangible assets Note Investment assets Property Note 21 3,733 3, Shares and interests in companies Note ,234 3,699 Shares and participating interests Note 23 1,343 1,078 1,339 1,077 Bonds and other interest-bearing securities Note 24 8,130 9,094 8,130 9,094 Other loans Note 25 5,071 4,314 5,416 4,819 Derivatives Note ,277 18,254 18,119 18,695 Investment assets for which the policyholder bears the investment risk Conditional bonus for portfolio bond insurance Note 33 17,978 16,649 17,978 16,649 Unit-linked insurance assets Note 34 73,761 60,168 68,503 56,372 91,739 76,817 86,481 73,021 Reinsurers share of technical provisions Claims outstanding Receivables Receivables referring to direct insurance operations Receivables referring to reinsurance Tax claims Note Other receivables Note Other assets Property and equipment Note Liquid funds Note 29 2,236 1,940 2,088 1,776 2,237 1,941 2,089 1,777 Prepaid expenses and accrued income Accrued interest income Other prepaid expenses and accrued income Total assets 112,645 97, ,057 93,966 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. HANDELSBANKEN LIV ANNUAL REPORT

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 7,633 6,941 7,442 6,814 Profit for the year Total equity 8,549 7,731 8,341 7,556 Subordinated liabilities Perpetual subordinated loan 1,129 1,129 1,129 1,129 Actuarial provisions (gross of reinsurance) Provision for life insurance Note 30 8,778 9,444 8,778 9,444 Provision for claims outstanding Note ,198 9,884 9,198 9,884 Technical provisions for life insurance for which the policyholder bears the risk Conditional bonus Note 32 1,437 1,489 1,437 1,489 Conditional bonus for portfolio bond insurance commitments Note 33 17,978 16,649 17,978 16,649 Unit-linked commitments Note 34 73,761 60,168 68,503 56,372 93,176 78,306 87,918 74,510 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 112,645 97, ,057 93,966 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 HANDELSBANKEN LIV ANNUAL REPORT 2014

16 Financial reports Statement of changes in equity Share capital Translation reserve Retained earnings Total Opening equity ,936 7,031 Profit for the year Other comprehensive income Total change before transactions with the owners Shareholder contribution received - - Total transactions with the owners - Closing equity ,640 7,731 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 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 ,814 6,933 Profit for the year Other comprehensive income Total change before transactions with the owners Shareholder contribution received - - Total transactions with the owners - Closing equity ,442 7,556 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 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. HANDELSBANKEN LIV ANNUAL REPORT

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 , ,723 Conditional bonus Provisions for life insurance Unit-linked insurance assets -14,922-13,103-13,460-12,079 Unit-linked commitments 14,922 13,103 13,460 12,079 Other assets Other liabilities Other comprehensive income Cash flow from operating activities 364-3, ,395 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 296-3, ,399 Liquid funds at beginning of period Note 29 1,940 5,423 1,776 5,175 Cash flow from operating activities 364-3, ,395 Cash flow from investing activities Cash flow from financing activities Liquid funds at end of period 2,236 1,940 2,088 1,776 Investment assets Property Note 21 3,733 3, Shares and participating interests Note 22, 23 1,343 1,078 4,573 4,776 Bonds and other interest-bearing securities Note 24 8,130 9,094 8,130 9,094 Derivatives Note Other loans Note 25 5,071 4,314 5,416 4,819 Net investment assets 18,277 18,254 18,119 18,695 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 (9) in the parent company and SEK 66 million (-14) in the, SEK 360 million (231) has been paid in and out for yield tax. See note 35, Taxes. 16 HANDELSBANKEN LIV ANNUAL REPORT 2014