Annual Review Your security is what we care about. Come along and get to know us better.

Transcription

1 Annual Review 2013 Your security is what we care about. Come along and get to know us better.

2 Welcome to the customers insurance company Every time we meet a customer, we also meet an owner. And we have many owners. We insure nearly one out of two people in Sweden and take care of the pension for more than two million people. You can insure your home, your car, your four-footed friend and your pension with us. Our job is to ensure that security accompanies every phases of life. We can help you review your insurance coverage so that it matches your living situation and family. Your security is what our hearts beat for. Our goal Our goal is to have the most satisfied customers of the insurance and savings industry. Every time we meet a customer, we also meet an owner. Everything we say and do affects our customers perception of us. Our vision Our vision is for people to feel secure in a sustainable world. As a significant investor, we have the possibility of influencing our surroundings to realize the vision. Our promise to you We are committed for you so that you and your family are secure today and tomorrow. Our job is to create security for you and everything you care about. We work based on your needs when we design our offerings.

3 Contents Good shall be better This is Folksam Customer-owned An eventful 2013 The larger, the safer Offers for every need An organisation with the customer in focus Growing numbers of customers are choosing us Strong financial position The customers are more satisfied than ever High-profile corporate governance A pioneer in sustainability issues World-famous traffic research We insure nine out of ten athletes Attractive employer Asset management Risk management - a part of the business New rules control development Four brands, two Groups and 11 insurance companies Folksam General Folksam Life Förenade Liv KPA Pension Group management and boards

4 Good shall be better 4 Folksam is the customers insurance company. For more than a century, we have combined heart and mind to create security for the individual as well as society in general. Our commitment to what the customers care about is continuing and during the year, enjoyed more success than ever. Now, Folksam is entering a new phase. In 2013, our market share increased. In hard competition, we are now closing in on 16 per cent of the property damage market and 15 per cent of pension savings in Sweden. At the same time that we see customer loyalty growing, we are also continuously being entrusted with more assignments and can proudly note that the number of customer is steadily growing. Nearly one out of five pension savers currently chooses us. Focus on existing customers is a success factor. Gathering one s insurance with us should be rewarding and the number of customers who have more than one product is consequently growing. At year-end, 495,000 customers had insured both their home and their car with Folksam. Of these customers, 58,000 have also chosen us when saving for their pension. Our financial strength provides good conditions for good returns on the long term. Handling risks and opportunities in asset management over time is one of our most important tasks. Our objective is not to provide the highest return in the industry every single year, but rather to avoid the big mistakes and thereby over time provide the highest return. Over a five-year period, Folksam s customers have had an average annual total return of 8 per cent. This bears being compared with most forms of savings on the market. Satisfied customers that talk about their experiences drive business. The measurements we took in 2013 show that our customers have never been more satisfied. At the same time, there are far too many conceivable customers who still do not see Folksam as an alternative. The fact that comparisons continuously prove that we are better than the competitors means that the proportion is constantly decreasing, but as long as there is a single person who cannot imagine becoming a customer of Folksam, we are not satisfied. A growing stock yields more claims and sets higher requirements on accessibility and personal treatment. We have to improve on this front. We are therefore continuing the work with accessibility and how we interact with the customer as a priority area. We must be there for our customers - creating security through advice and support, both in daily life and when something unexpected occurs. As the new President and CEO, I can confirm that the successes of recent years have given us an excellent platform for the future. After a long period of work, we can finally see the results of our work. Of course, this does not mean that we can begin to take it easy, rather that we have the conditions to shift up a gear. Our financial strength is the prerequisite now that Folksam is entering a new phase - a phase with a focus on modernisation, efficiency enhancement and consolidation. We must ensure that the operations and infrastructure, whether it involves expertise, systems or processes, are as effective as possible and that everything is in order. We will improve at what we are already good at. We will continue to provide security to our customers through good insurance solutions at the same time that we will become more efficient and find solutions that are even smarter than those we already have. Good shall be better! Jens Henriksson Stockholm, March 2014

5 Jens Henriksson Age: 47 years Family: Married and has three children, lives in Hägersten in southern Stockholm. Began as the President and CEO of Folksam on 1 September Before that, he was the CEO of NASDAQ OMX Stockholm. Has also been the Executive Director and Board member for the IMF in Washington, D.C. and State Secretary at the Ministry of Finance. Jens has also been a columnist for the news magazine Fokus and the Swedish daily Svenska Dagbladet. 5

6 This is Folksam Folksam is a customer-owned company. This means that our customers are our owners and that our surplus goes back to the policyholders. This is how we have always worked. In insurance terms, this means that we are a mutual company. 6 Thanks to our broad range of insurance and pension savings, we can see to the customers total needs. Folksam s offering comprises auto and home insurance for households, business insurance in selected areas, occupational pensions and pension savings for private individuals as well as group life insurance. Strong finances give us opportunities Our financial strength provides the customers good chances for a strong longterm return on their pension savings. Both Folksam Life and the subsidiary KPA Pension have significantly more assets than are needed to pay out the guaranteed pensions. In the past five years, the average total return in KPA Pension and Folksam Life has been among the highest in the industry. A sustainable world We get involved in what our customers care about and therefore do things that are not always associated with insurance companies. Our commitment involves such areas as the environment, traffic and ethical investment all to encourage development towards a sustainable world.

7 Did you know that Folksam has existed for more than a century... we influence traffic safety through our world-renown traffic research... nearly one out of two Swedes are insured by Folksam... nearly one out of five new pension savers chooses us 7... we are the insur ance company of sports and insure nine out of ten athletes in Sweden... we have worked with sustainable investments since 2001 and have ethical criteria on all assets under management Folksam in figures Total premium volume SEK 40.4 billion Number of employees 3,640 people Total assets under management SEK 304 billion Solvency ratio in Folksam Life 161% Average annual return in Folksam Life over five years 8.0% Market share non-life insurance 15.9% Market share life insurance 14.4%

8 The story of Folksam is the story of our customers The basic idea of all insurance is to distribute the risk across more people. This is the story behind Folksam. It begins at time not so far from the present, just a bit more than 100 years ago, when a large part of Sweden s homes were uninsured. 8 The need for insurance was great, perhaps even greater than today. Many people lived in homes made of wood and open flames were needed for both heating and cooking. Right here, in the most flammable development, fire insurance was something unattainable. No insurance company insured anyone who was assessed in advance to be a bad deal. The idea of a mutual insurance association grew out of the idea that everyone has the right to insurance. But starting such an association proved difficult; no bank was willing to provide loans and authorities demanded that one could present subscribed insurance at a value of SEK 2 million. The situation looked bleak for the new entrepreneurs. Nonetheless, by the end of the year, they had already managed to gather 6,000 subscriptions for fire insurance! After a few years, they finally had their SEK 2 million. Folket i samarbete or the people in cooperation became Folksam. We were created by sharing the risk and the benefits and this is how we still work. We get involved in what our customers care about They are our owners. In the following pages, you will have the opportunity to meet a few of them.

9 Every time we meet a customer, 9 we meet an owner. Meet Jessica, Fredrik and Beathe who are all involved and own Folksam.

10 Jessica Nyberg Owner since: 1995 Jessica works in an art materials store and loves climbing. 10

11 I have yet to meet a jar I can t open If one of Jessica s customers were to ask what she does in her free time, they might be surprised. Because the girl who quickly wraps up the brushes and paint at the cash register is a competitive climber. Jessica has been climbing since she was 13. She practices three times a week and gladly spends her holidays in Thailand, France, India or China - only places where she can climb. Luckily, her boyfriend shares her passion. The kind of climbing Jessica does is called bouldering and is done without a rope, most often with a pad below, a mat that dampens the fall. Falling is a part of the sport, says Jessica. In bouldering, the climbing is done with little movement and it is often more athletically and technically challenging than other kinds of climbing. Jessica is strong, especially in her hands, which her friends gladly take advantage of when they need help opening anything from jam jars to pickle jars. I have yet to meet a jar I can t open, says Jessica and laughs. No jar is impossible, some just take a bit more time. Then she says: No, don t write that, it sounds like I m bragging! Which is hard to agree with, because this climbing art supply salesperson is more inclined to be humble. But strong. 11

12 Fredrik Josefsson Owner since: 2007 Fredrik invents games for the mobile phone and likes industrial design for fun. 12

13 You can even fill the machine with metal. The plastic can Fredrik is holding in his hand costs around SEK 400. Still, it is completely empty. The top is also threaded wrong, explains Fredrik. I was thinking wrong when I made the sketch on the computer. The can is printed on a 3D printer at a company that is specialised on 3D printing. Owning one s own 3D printer is still not within financial reach for most people, even if it would certain be worth the money. This is apparent when you hold up and look at a completely perfect item that needed neither form or assembly to be made. It feels like magic that the machine on its own was responsible for the production of the fully usable little plastic can (threaded wrong or not). All that was needed was a prototype material and Fredrik s computer file. This is actually no hocus pocus, though. Most people have no problem making something by removing material, which is after all how a sculptor works when cutting a statue out of a block of stone. In a 3D printer, the object is instead made by adding material. Even his eyeglass frames are designed by Fredrik and printed from the same prototype material. When you are happy with your design, you can print it out with a nicer material if you want. You can even fill the machine with metal. 13

14 Beathe Rörstrand Owner since: 2005 Beathe works as a service technician supervisor and loves her motorcycle. 14

15 I don t take any long trips exactly, but a lot of weekend tours. Beathe s black used Harley-Davidson Sportster is from 2001 and she is actually also one of its former owners. My daughter had managed to turn about one year old and demanded a lot of time. There won t be much riding here, noted Beathe cynically like many other parents of small children before her. So she sold her Harley. But when the bike came up for sale again, she could not resist becoming its owner again. Beathe explains the fact that a Harley-Davidson was the first choice by saying she is a speed freak. A fast Japanese bike would be dangerous in her hands. The Harley invites more relaxed tours. I don t take any long trips exactly, but a lot of weekend tours and often enjoy doing so on my own. I pack a small lunch and a good book. Then I take a tour somewhere with some water, lie down on a blanket and read. 15

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17 You are involved and have influence Folksam is a mutual company. This means that our customers are also our owners. For us, it is important that the customers can be involved and influence what we do. Folksam has no shareholders. Instead, it is influence from our four million customers that leads to decisions at the Annual General Meeting. The customers influence in the form of voting rights, the right of expression and proposal takes place through specially elected delegates. Delegates are either directly elected policyholders or appointed by large customer groups/organisations. In Folksam General, the customers are represented by 80 delegates and in Folksam Life by 75 delegates. Multiple benefits by being customer owned As a customer-owned company, the entire surplus we generate goes back to the customers, either in the form of development of our offering or as a bonus. In light of the strong financial position in Folksam General, a long-term bonus programme was launched in The bonus rate in Folksam Life was increased twice in 2013 and is currently 6.0 per cent. Policyholders Represented by delegates at the General Meeting. 80 people in Folksam General and 75 in Folksam Life. 17 Nomination Committee General Meeting The Customer Ombudsman External auditors Audit committee Remuneration Committee Board Internal audit Group management Finance committee CEO Functions for internal governance and control

18 An eventful Market share grew The market shares grew in both the general and life operations. Nearly one out of five new pension savers chooses us. Sweden s largest insurance company With a total annual premium volume of more than SEK 40 billion, Folksam is Sweden s largest insurance company. Life Insurance Company of the Year for second consecutive year Folksam was named the Life Insurance Company of the Year in the Söderberg & Partners traffic light report for the second consecutive year. New CEO Jens Henriksson began as the new President and CEO in September. Continued refinement To focus on our core business, the management right of Svenska Lärarfonder s funds is being transferred to DNB. Customers more satisfied than ever Folksam s measurements shows that our customers are more satisfied than ever before. Folksam selectable in ITP Folksam became a selectable alternative for traditional insurance in the ITP collective agreement area. ITP is a collectively agreed occupational pension that private salaried employees receive in addition to their national pension. SalusAnsvar is a part of Folksam During the year, we successfully moved over both competencies and an insurance portfolio. Several large partner customers, especially Saco associations, are now a part of Folksam s offering. The integration will be fully completed in Most sustainable company KPA Pension was named the most sustainable company in the finance industry in Folksam ended up third on the same list. Home insurance received highest marks Our most extensive home insurance received the highest marks in a comparison done by Konsumenternas Försäkringsbyrå. Konsumenternas Försäkringsbyrå has the goal of providing consumers impartial facts and guidance free of charge.

19 Du är en vinnare igen! 19 Årets livbolag 2011 och 2012 Life Insurance Company of the Year again Folksam was named the Life Insurance Company of the Year in the Söderberg & Partners traffic light report for the second consecutive year. At the Insurance Awards 2013, Folksam was named the Life Insurance Company of the Year with the motivation: Folksam again showed that it is possible to provide a secure and stable traditional product that offers good, risk-adjusted return to the savers.

20 The larger, the safer The basic idea of all insurance is to distribute the risk across more people. Consequently, size is important. Nearly one out of two Swedes are insured by Folksam. More than two million people save for their pension with us. We are one of Sweden s ten largest investors and manage assets of SEK 304 billion. 20 Folksam is one of a few insurance companies that have a strong position in both life and non-life insurance. In total, our customers pay in more than SEK 40 billion in annual premiums. 15 per cent of the entire insurance market Folksam s market share of the total premium volume in the Swedish insurance market was nearly 15 per cent in Grew the most in the market In 2013, Folksam grew the most in the non-life insurance market. The total premium volume grew by just over 7 per cent. At year-end, we had 15.9 per cent of the total market of SEK 67 billion. LARGEST PREMIUM VOLUME IN THE INDUSTRY Premiums paid in, SEK billion 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Folksam LF Skandia Alecta AMF SEB Swedbank Unit-linked, collective agreement and other life insurance Non-life insurance Source: Swedish Insurance Federation and pertains to premium volume December 2013 and previous 12 months. IF TryggHansa Nordea SHB Avanza Danica One out of five new pension savers chooses us Two million people save for their pensions with Folksam. The market share measured in total premium income for life insurance amounted to 14.4 per cent in This means that the premium income for old and new insurance policies was SEK 27 billion of the total market of SEK 185 billion. MARKET share NON-LIFE INSURANCE Folksam 15,9% MARKET share TOTAL life market Folksam 14,4% Länsförsäkringar 29,8% If 18,3% Trygg-Hansa 16,1% Folksam 15,9% Moderna 3,4% Övriga 16,5% Skandia 15,4% Folksam 14,4% AMF 10,3% SEB Trygg Liv 8,5% Swedbank 7,2% Nordea Liv 7,0% Alecta 6,5% Länsförsäkringar 7,2% Others 23,5%

21 Ethical criteria on all investments Folksam is one of Sweden s ten largest investors and manages assets of SEK 304 billion. The assets managed are covered by criteria for the environment, human rights and anti-corruption and are invested in interest-bearing securities, shares, properties and alternative investments. Folksam s holding of interest-bearing securities mainly consists of bonds issued by the Swedish government, Swedish municipalities, Swedish mortgage institutes or Swedish companies. ASSETS under management SEK 304 billion 2012 SEK 275 billion 2011 SEK 253 billion 2010 SEK 235 billion 2009 SEK 215 billion GOOD risk diversification in the PORTFOLIO 21 Swedish equities SEK 47 billion Non-Swedish equities SEK 43 billion Swedish bonds SEK 185 billion Non-Swedish bonds SEK 3 billion Properties SEK 20 billion Alternative investments SEK 5 billion Hedging instruments SEK 1 billion Ethical criteria on all investments Read more about how we work with responsible ownership on page 30. Strategic asset management Read more about how we invest the customers money on page 44.

22 Offers for every need We work with life and non-life insurance operations under several brand names with a focus on the Swedish market. The offer can be divided into pension savings, personal risk, and general insurance. 22 Our job is to provide security to our customers through good insurance solutions. Pension savings We offer traditional life insurance within Folksam Life and KPA Pension. The traditional life insurance is a form of saving where we invest capital and manage the invested capital. This means that the saver does not need to choose the level of risk. We distribute the capital between equities, interest-bearing securities and other assets. This form of savings also has a guarantee on premiums paid in and an agreed guarantee interest. When there is a surplus from asset management, it is distributed to the savers with the help of bonus interest. Unit-linked insurance means that the customer him or herself chooses the level of risk for his or her savings by choosing which funds the capital is invested in. We offer savings in unit-linked insurance in Folksam Life, Folksam Fondförsäkring, KPA Pensionsförsäkring and Folksam LO Pension. In Folksam Fondförsäkring and Folksam Life, we offer a quality assured, guided range of 60 to 80 funds. We guide based on the parameters of return, low fees and ethical investment. Since we are not dependent on our own fund management company, we can always choose among the market s best funds in every area. Otherwise, a tailor-made range of funds is offered in the respective agreement area. For KPA Pension, the range of funds consists of SRI-screened funds. Folksam LO Fondförsäkring has a carefully selected range of external funds that meet the requirements in the agreement area. Personal risk In Folksam, there are four companies that offer personal risk insurance: Folksam Life, Folksam General, Förenade Liv and KPA Livförsäkring. Our group insurance comprises group life and occupational group life insurance and health and accident insurance. Health insurance reimburses loss of income or consists of fixed lump sums. Accident insurance reimburses costs that can arise in connection with an accident, and offers compensation in cases of invalidity. From group life and occupational group life insurance products, a non-recurring payment is made to the beneficiary when the insured person dies. We have group life and health and accident insurance that is adapted to labour unions, companies and organisations, and those for individual solutions. Non-life insurance Folksam offers non-life insurance in three companies; Folksam General, Folksam Skadeförsäkring and Tre Kronor. The latter is a white brand, meaning that it is a brand that stands for the actual product, which is then sold under another brand name. Home insurance is the core in our non-life insurance offering. When the customers requested simple and clear offerings, we packaged the home insurance into Base, Medium and Plus, a move that makes it easier for the customer to choose the right insurance. Read more about the various companies in Folksam on page 52.

23 An organisation with the customer in focus Folksam is organised into three business areas: Private, Partner and Collectively Agreed Business and subsidiaries. In addition, there are seven central units. Folksam Life Collectively Agreed Business Private business Folksam General Folksam Unit-linked insurance Förenade Liv Folksam LO Pension Svenska Konsumentförsäkringar KPA Pensionsförsäkring The Customers Tre Kronor Försäkring 23 KPA Livförsäkring Folksam Skadeförsäkring (Finland) Group-wide units Partner Salus Ansvar Product and Claims The Private business area is responsible for sales and customer service regarding individual insurance and pension savings for private individuals. The responsibility pertains to both life and non-life insurance under the Folksam brand. The Partner business area is responsible for Folksam s business with partner and organisational customers. It includes the group insurance business and commercial insurance. The business pertains to non-life insurance, personal risk insurance and savings. The Collectively Agreed Business area is responsible for the parties to collective bargaining agreements in the Swedish labour market. This includes, for instance, occupational group life insurance, health insurance and pension savings, as well as services and administration for the employers.

24 Growing numbers of customers are choosing us We are continuing to grow in both the life and non-life markets. More customers and more satisfied customers combined with a financial strength that is better than ever make us one of the industry s strongest players. This provides us with the conditions to continue providing security and high returns. We have the offerings for every need in pension savings, personal risk and non-life insurance. Demand for our products is growing in all groups. The premium income increased by 15 per cent or SEK 5.2 billion in 2013 to total SEK 40.4 billion. TOTAL PREMIUM VOLUME Premiums comprise premiums earned in P&C insurance, premiums written in life insurance, and receipts and fees from unit-linked insurance investors SEK 40,438 million 2012 SEK 35,226 million 24 Pension savings The market share measured in total premium income for life insurance amounted to 14.4 per cent. The premium volume in traditional insurance continued to grow in Our strong key figures and the broad sales through our own sales force and agent cooperation contributed to the increase. Premium payments received from policyholders in unit-linked insurance have increased sharply in the past five years. This is a result of the efforts we have made in the agent distribution market and in contractual pensions. An improved fund offering to the customers is another important success factor for the continued growth. The total unit-linked insurance assets in the four companies amounted to just over SEK 79 billion at year-end. Collectively agreed pensions from employers account for a significant part of the premium volume. Since 2013, Folksam or one of our subsidiaries can be selected as the manager of the contractual pension in all agreement areas. Within the Folksam brand, there is a continued development of the offering for the individual occupational pension market, occupational pensions from employers who do not have collective agreements SEK 33,263 million 2010 SEK 30,496 million 2009 SEK 29,356 million TOTAL PREMIUM INCOME LIFE INSURANCE 2013 SEK 16.2 billion 2012 SEK 13.0 billion 2011 SEK 11.5 billion 2010 SEK 10.2 billion 2009 SEK 10.3 billion

25 Personal risk The premium volume for personal risk was stable during the year. We offer trade unions, companies and organisations adapted group life and health and accident insurance. As the sports insurance company, Folksam provides accident insurance to those active in several of the largest sports associations in Sweden. The efforts with individual accident insurance with supplements for financial invalidity and diagnosis insurance are continuing. Thanks to a good return on assets, the premiums have been reduced in recent years for municipalities and county councils. total PREMIUM income Non-LIFE insurance 2013 SEK 9.5 billion 2012 SEK 8.9 billion 2011 SEK 8.2 billion 2010 SEK 7.7 billion 2009 SEK 7.0 billion Non-life insurance Premium income increased in both household and home owner insurance as well as auto insurance. Sales increased, in part through bank cooperation and greater customer loyalty. The commercial market continued to develop positively with a focus on small businesses, property and auto. Continued focus on combination discounts increased the number of policies taken out. Gathering one s insurance with us should be rewarding and the number of customers who have more than one product is consequently growing. At year-end, 495,000 customers had insured both their home and their car with Folksam. Of these customers, 58,000 have also chosen Folksam when saving for their pension. The acquisition of SalusAnsvar accounts for continued growth in the Swedish non-life insurance market and expands the collaboration with white-collar workers and university graduates

26 Strong financial position The solvency ratio is the most important measure of financial strength for a life insurance company. It indicates the market value of the company s assets relative to the guaranteed commitments to the customers. 26 The solvency ratio in KPA Pension and Folksam Life was 172 per cent and 161 per cent, respectively. This means that we have 72 per cent and 61 per cent, respectively, more assets than are needed to pay out the guaranteed pensions. A high solvency ratio is also a prerequisite to be able to provide good future return on assets under management. In 2013, the total return for Folksam Life and KPA Pension amounted to 7.6 per cent and 8.2 per cent, respectively. Seen over the last five-year period , the average total return on traditional insurance has been 8.0 per cent for Folksam Life and 8.3 per cent for KPA Pension. SOLVENCY ratio FOLKSAM LIFE % % % % % Surplus that benefits the customers Folksam is a mutual insurance company. This means that our customers are our owners. The profit we make does not go to shareholders, but rather stays with our customers in the form of better insurance and bonuses. In light of the strong financial position, the bonus was reinstated in Folksam General in The programme is long term and the size of the bonus is based on the profit for the year. For 2013, SEK 278 million has been reserved. Disbursements will take place in 2014 and the bonus comprises a total of 1,750,000 customers. In 2013, two increases of the bonus rate were carried out on traditional pension savings. The bonus rate was increased from 4.5 per cent before taxes and fees to 5 per cent in April and then to 6 per cent in June. The bonus rate was increased in light of Folksam s strong development and the fact that the collective consolidation in the company (the ratio between the company s assets and how much is distributed to the policyholders) is above the set target level. KPA Pension uses rate of return instead of the bonus rate. The rate of return means that all returns are distributed directly to the savers accounts after every quarter. The collective solvency ratio is therefore always 100 per cent at KPA Pension. The rate of return for 2013 was 8.0 per cent.

27 TOTAL return FOLKSAM LIFE ,6 % ,0 % ,5 % ,7 % ,3 % TOTAL return five-year average Branschen 7,8 % Folksam Life 8,0 % KPA Pension 8,3 % Branschen Folksam Life KPA Pension Folksam General at year-end Solvency ratio, Parent Company 149.3% Combined ratio 103% Total return % KPA Pension at year-end Solvency ratio 172% Collective funding ratio 100% Rate of return 8.0% Total return % Average return % Folksam Life at year-end Solvency ratio 161% Collective funding ratio 120.4% Bonus interest 6.0% Total return % Average return % Cooperative occupational pension at year-end Collective funding ratio 118.4% Bonus interest 6.0 % 27 Glossary Solvency ratio The relationship between assets and technical provisions to cover future insurance commitments. Collective funding ratio The ratio between asset values and the company s total commitments. Solvency ratio Consolidation capital in relation to one year s premium income. Bonus interest Folksam Life is a customer-owned company. Our surplus goes back to our owners through the bonus interest. The rate is not guaranteed, and the company can reclaim the part of the surplus that exceeds the guaranteed rate. Total return ratio The sum of yield and realised and unrealised changes in the value of investment assets. Bonus Folksam General is a customer-owned company. Our surplus goes back to our owners through the bonus.

28 The customers are more satisfied than ever Of the customers who have been in touch with us, 96 per cent say they are satisfied and that it was easy for them to get through. In addition, they also feel that they received good service. 28 The competition for customers is increasing at the same time that the differences between the players are decreasing. Consequently, how we handle contact with customers is of major importance to customer satisfaction. To measure satisfaction and what the customers think of us, we continuously do surveys in Folksam. When we measure satisfaction in our entire customer base, we use the Folksam Customer Index (FCI). In 2013, satisfaction among the customers developed well and exceeded the set targets. The fact that our customers are more satisfied than ever is most clearly seen in our measurements of those who have been in contact with us. Nine out of ten customers who have had a claim or have been in contact with our customer service are satisfied. Sensitivity and action have good results What the customers think and what we do go hand in hand with the results in our customer surveys. Some examples of measures are the combination discounts and the bonus meet the customers wishes that we see and appreciate them having many policies with us and being long time customers. The customers being claims free and taking preventive steps also provides discounts or lower costs on the insurance. Since many customers feel that it is difficult to understand how insurance works, we are also working to make both the products and the information about them simpler and clearer for a better experience. The combination discounts and bonus are examples of steps we have taken in recent years. What the customers think and what we do go hand in hand and the measurements show that the customers have never been more satisfied than they are now. Ten years ago, we looked more at what our existing customers thought about our existing products. We now involve the customers from the beginning when we develop products and offers. Jacqueline Sejersen In charge of research at Folksam Background Has worked with surveys at Folksam for ten years.

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30 High-profile corporate governance Our customers care about how listed companies handle the issues of sustainability. We influence the companies we invest in by applying environmental, human rights and anti-corruption criteria. 30 We at Folksam firmly believe that companies that take responsibility for the environment and human rights are more profitable in the longer term. There are companies we have deliberately chosen not to invest in, regardless of how small their environmental impact is or how good a working environment they have. The exclusion criteria are tobacco and illegal weapons such as cluster munitions, anti-personnel mines and nuclear weapons. All companies within Folksam apply these criteria, with two exceptions. The subsidiary KPA Pension has decided on even tougher exclusion criteria and also does not invest in the alcohol industry or the commercial gambling industry. For Folksam General, where auto, home and second home insurance has been certified with the Good Environmental Choice ecolabel, this means that investments in coal-fired power, nuclear power and uranium are also excluded. Influencing companies to take responsibility We have SEK 304 billion under management on behalf of just over four million customers. This gives us the ability to influence and change society in the long term. Our objective of persuading companies to assume their social responsibility is very much for the public good, as we believe that knowledge helps bring about positive change. We regularly publish reports and indices in which we present information on the companies performance in areas such as the environment, human rights and gender equality. We influence in many ways: through meetings, letters, at AGMs and by conducting an active dialogue for constructive changes. Folksam's work on Corporate Governance Number of companies with which Folksam has engaged in active dialogue Number of Swedish general meetings in which Folksam participated Nomination committees of which Folksam is a member Includes an extraordinary general meeting

31 UN principles guide Folksam The UN Principles for Responsible Investment (PRI) are a UN initiative launched in 2006 and aimed at introducing sustainability issues into the investment process for institutional investors and pension managers. Folksam was the only Swedish investor to take part in drawing up the guidelines, which apply to the environment, social issues and corporate governance (ESG issues). Folksam was also one of the first investors to endorse the principles. Principle 1 Folksam will incorporate ESG issues into investment analysis and decision-making processes. Principle 2 Folksam will be an active owner and incorporate ESG issues into its corporate governance policy and practices. Principle 3 Folksam will seek appropriate disclosure on ESG issues by the entities in which it invests. Principle 4 Folksam will promote acceptance and implementation of the Principles for Responsible Investment within the investment industry. Principle 5 Folksam will work together with other investors to promote use of the Principles. Principle 6 Folksam will report on its activities and progress towards implementing the Principles for Responsible Investment. Year s events in brief Folksam participated in 43 annual general meetings, one extraordinary general meeting and was represented on two nomination committees during the 2013 financial season. Besides this, Folksam was involved in a number of dialogues with corporate boards with regard to incentive systems. In 2013, the operations of 1,847 companies were reviewed, focusing on their performance in relation to the environment and human rights. Folksam s 20 largest Swedish holdings were contacted and meetings were held with six of these during the year. In addition to this, 20 Swedish companies were identified that ran the greatest risk of exposure to incidents in the environment and human rights. Four companies were selected, and meetings and teleconferences were held to examine the companies risk situation. In 2013, Folksam voted at a total of 251 foreign AGMs. Among other matters, we voted for proposals that Statoil should conclude its oil sand extraction in Canada, and a proposal on expanded representation by female board members in BCE Inc. The Folksam Index of Corporate Social Responsibility was presented for the sixth time in Ericsson received the highest rating for its work with human rights and Volvo received the highest rating for its environmental efforts. Ericsson received the year s highest total rating in terms of both human rights and the environment. Since 2008, Folksam has been cooperating with the Norwegian life insurance company, KLP, and Finnish pension company Ilmarinen, in the Nordic Engagement Cooperation (NEC). The purpose of NEC is to coordinate corporate governance activities for the environment, human rights and anti-corruption. In 2013, NEC had a dialogue with 11 different companies, all based outside the Nordic region. The Department for Responsible Ownership was represented at several seminars and panel discussions during the year, including at the politician week in Almedalen. Folksam s Department for Responsible Ownership has run the blog A Cat Among the Pigeons ( since This blog continued in 2013 and was also supplemented by a twitter where the latest updates are regularly published. 31 Read more about the UN Principles for Responsible Investment (PRI) and how Folksam meets its commitment as a signer in Folksam s sustainability report.

32 32 Carina Lundberg Markow Head of Responsible Ownership

33 When I came to Folksam in 2001, I saw the traffic researchers as role models. She has been called troublesome and powerful, but has also been rewarded as a Super Communicator. Carina Lundberg Markow, Head of Responsible Ownership, was the one who began the work with ethical investment criteria in Folksam. 33 When I came to Folksam in 2001, I saw the traffic researchers as role models. Their tests and reports were a good way to influence the auto industry and the customers and at the same time build the brand. My goal was that we should work with Folksam s ethical investment criteria in the same way - with the foremost aim of influencing the companies. Today, Folksam is among the ten largest owners on the stock exchange, but at that time, we were maybe the 18th or 19th largest. Then, it was difficult to be heard at the companies; they shrugged everything off. Many senior executives had not even reflected over sustainability issues. They were infuriated. The strongest supporter group was environmental and sustainability managers who felt that they finally had somebody from the outside who was watching and wanted to emphasize their work. The strategy has primarily been to reach listed companies through the media and consequently, the trade press has been a main focus. Most of Folksam s customers do not read the likes of Dagens Industri every day, however, and reaching out to them has been a challenge - there is still a great deal to do. To reach out to the customers, all of the employees are an important channel. Sustainability issues have proved to be a way to build new customer relations and cultivate existing customer relations. Carina has been successful in her strategy and is frequently seen in the media in Sweden. If you are going to talk about these issues, a person has to do it even if it happens that the person, rather than the organisation, is emphasized. I still think that the vast majority of people associate me with Folksam. Talking about ethics in business, the environment and gender equality has meant that I have been viewed as troublesome - a role I am happy to accept if it is what is needed to get our message out. At the same time, the view of sustainability issues has become more modern. Today, I am not perceived as much as a troublemaker as I was a few years ago. What does the work look like today? An incredible amount has happened and has done so quickly. Today, business leaders have better knowledge about what risks their companies run based on a sustainability perspective. A few have even realised that there is potential to increase their sales and thereby their profits.

34 A pioneer in sustainability issues Folksam has the ambition of being on the forefront in environmental and climate work and has worked with sustainability issues since the 1960s. Environmental and climate issues are of central importance to us - nobody will be able to afford insurance in the future if we do not all help out to slow the climate changes. Because we are a large company, we have considerable opportunities to exert an influence and our high environmental requirements have contributed to a better environmental standard at several large subcontractors. 34 Both our auto and building damage operations are environmentally certified under ISO In 2011, our auto, home and second home insurance received the stringent Good Environmental Choice ecolabel from the Swedish Society for Nature Conservation. To conduct an active dialogue with our stakeholders, we worked with ISO in 2013, a guiding standard in social responsibility. In and 2014, we will educate nearly 2,000 companies throughout Sweden in environmental impact. our purchasing organisation began working according to the substitution principle, which meant that all new procurement has been guided to more environmentally friendly alternatives. we worked out a digital platform for dialogue with our stakeholders. All emissions are climate compensated Folksam s climate footprint from its own operations amounts to 2,792 tonnes CO 2 e in The foremost emission sources were air travel, road travel and heating, which together accounted for 94 per cent of the total emissions. These are the areas we are focusing on to reduce our climate impact. Folksam also calculates the climate impact from energy and water consumption from the properties Folksam invests in, which we describe in more detail in our sustainability report. For several years, we have climate compensated the climate footprint from our operations and our property portfolio through the Vi Agro-Forestry Programme tree-planting project. Vi Agro Forestry plants an average of five trees for every tonne carbon dioxide emitted. The total climatic impact that we compensate for amounts to 6,751 tonnes of carbon dioxide. This means that nearly 34,000 trees will be planted Road travel Air travel 1,092 1, Train travel Heat * 371* Electrical system Printed matter Paper Coffee 21** Water*** 2 2 Not included Total tonnes CO 2 e 2,792 2,489 2,261 * Only the head office s heating was included in the figures in 2012 and 2011 ** For 2013, all coffee purchased for Folksam s operations is reported *** Only water consumption for the head office in Skanstull is included. Folksam s other offices and Förenade Liv s offices are not included in the reporting.

35 Clear guidelines for business travel Our travel policy provides all employees with clear guidelines for business travel. It states that every journey should be well-planned and justified and that rail travel should be used for trips up to 500 kilometres, such as the route Stockholm-Gothenburg, for environmental reasons. Fewer offices results in lower electricity consumption All electricity purchased for Folksam s and KPA Pension s head office, the offices throughout Sweden and Folksam s subsidiary Förenade Liv s office premises is ecolabelled with the Good Environmental Choice ecolabel. Electricity consumption, and thereby the climatic impact, from the offices decreased in 2013 by approximately 11 per cent compared with The reason for the decrease is that we continued our reorganisation in 2013 to improve efficiency of the operations at the offices around the country. From print to digital We have a clear ambition to reduce the number of printed materials by increasingly shifting from physical printed matter to publishing information in a digital format. This means that customers will have the opportunity to receive insurance conditions and invoices digitally. In 2013, 4 million fewer copies of insurance terms and conditions for non-life and group insurance, and the climate impact from printed materials decreased by 17 tonne CO 2 e. The decrease was also due to more detailed documentation being prepared during the year, which made it possible to calculate the total weight and thereby perform more exact calculations. Environmentally friendly car repairs To reduce the environmental impact from car repairs, the repair shops that we engage extensively recycle spare parts instead of automatically choosing new spare parts. In addition, plastic parts and glass windows are repaired instead of always using new spare parts. Re-using and repairing instead of buying new does not just represent a gain for the environment, but is also a good deal for us and our customers. In 2013, this approach contributed to avoiding a 1,441-tonne mountain of waste and savings of just over SEK 147 million in the repair of damaged cars. Suppliers are trained in Good Environmental Choice In 2013, the purchasing organisation held digital environmental training for all suppliers of claims adjustment in the construction sector, and also began the same training with suppliers in the auto sector. In total, this training was sent out to all 261 suppliers in construction, where all employees with customer contact or who do claims adjustment were requested to participate. In 2013, we also began the distribution of the training to our 1,575 suppliers in auto. The training resulted in all participants receiving the information needed to create a fundamental understanding of the criteria that Good Environmental Choice sets, both on the certified products, but also on our suppliers of claims adjustment. The objective was to spread basic knowledge to the participants about how the environment is affected by the daily work methods in the respective industry, and how an operation can work to reduce its negative environmental impact. 35 Read more about our environmental efforts in the Folksam Sustainability Report.

36 36 Karin Stenmar Environmental and Climate Manager at Folksam

37 The environmental and climate issue permeates all we do in Folksam. 37 Nobody will be able to afford insurance in the future if we do not take responsibility for the climate issue - insurance companies will not be able to afford to do business and individuals will not be able to afford to take out insurance. These are the words of Karin Stenmars, Environmental and Climate Manager at Folksam, when answering the question of why the environment is important to an insurance company. Our mission as an insurance company is not only to spread the risks between groups and individuals, but also over time. Individual events do not directly lead to premiums increasing. However, climate changes over time will affect our planet. More storms, higher water levels and more precipitation, with more damage as a result, are a few of the challenges to society. In recent years, there have been a lot of storms, is this something you notice in Folksam s claims payments? Storm damage in particular has not hit us so hard, since our customers do not have so much forest insured. However, we are dominant in the home insurance market and there, we see an increase in water damage as a result of a wetter climate and increases in flooding. Housing close to the coast will be much more exposed in the future; there is talk of the water level rising by one metre in 80 years, says Karin. For this reason, Folksam works based on a comprehensive responsibility and uses its knowledge and strength to drive change, including by setting stringent environmental requirements on itself and the companies it cooperates with or invests its customers funds in. As an example, our auto, home and second home insurance products have been certified with the Good Environmental Choice ecolabel. Sustainability is about a long-term approach and it applies regardless of whether we will manage pension funds, invest in the property market, repair damage to a house or influence which cars should be on our roads. What we do shall last for many years, says Karin. This is the macroperspective, but we also need to talk about the issue from a microperspective. It is in daily life that we all can have an influence.