SWEDISH INSURANCE FEDERATION ANNUAL REPORT 2008

SWEDISH INSURANCE FEDERATION ANNUAL REPORT 2008

CONTENTS ANNUAL REPORT 1 The year in brief 2 Managing Director s statement: We want to contribute to a constructive dialogue 4 Insurance for a well-ordered society 6 Dialogue is the keyword for success 8 Transparency builds trust 9 Solvency II - better consumer protection and increased competition 10 Improved road safety and better rehabilitation 11 Industry statistics 14 Income statement and balance sheet 15 Board of Directors and committees 16 Member companies

The year in brief Strengthened cooperation with the Government A series of round-table discussions between the Government and financial sector actors was launched in June 2008. In the 2009 Budget Bill, the Government announced that a joint Government finance industry forum would be established to create the conditions needed to strengthen and expand the Swedish financial sector. The Swedish Insurance Federation has been actively involved in establishing this cooperation and will continue its commitment to these efforts in the future. Politicians gain greater insight into insurance issues Over the year, the Swedish Insurance Federation organised a number of meetings with politicians. These meetings aimed to build the politicians knowledge and understanding of the Federation s work and of the role and contribution of private insurance to society. These meetings will continue in 2009. Success in the health insurance area The Swedish Insurance Federation worked successfully with a range of actors on the Government s proposal to coordinate private health insurance compensation with public compensation. Following massive criticism of the proposal, the Government announced at the beginning of the year that it does not intend to proceed with the proposal to coordinate extended sickness benefit with other insurances. More than 80 proposals submitted to the Federation for comment In 2008, the Swedish Insurance Federation received more than 80 communications for comment, mostly reports and other documents from government ministries. The Federation commented on most of these. In a few cases, the Federation was asked to submit its opinion to the Swedish courts. At the international level, the Federation takes part in consultations from other bodies, consultations that are open to all for comment. Climate conference establishes platform for Nordic cooperation In April, the Swedish Insurance Federation hosted a Nordic climate conference for the insurance industry. This conference launched a platform for continued Nordic cooperation in the area. In autumn 2009, the Danish Insurance Association will host a joint Nordic climate conference in Copenhagen. Swedish chair of CEA At the 2008 General Assembly, former chair of the Swedish Insurance Federation Tommy Persson assumed the chair of CEA, the European insurance and reinsurance federation. Marine and other transport insurance operations integrated On 1 January 2008, marine and other transport insurance operations previously conducted by the Swedish Association of Marine Underwriters were incorporated into the Federation s operations. In May, the Federation organised a Nordic marine insurance conference on marine vessel and transport insurance. The Danish Insurance Association will host the 2009 conference. 1

Managing Director s statement: We wish to contribute to a constructive dialogue In autumn 2008, confidence in the entire financial market came under the spotlight due to the serious financial crisis. The Swedish Insurance Federation s activities over the year were underpinned by greater transparency and a heightened commitment to constructive dialogue with politicians and decision makers on issues central to the industry. The Swedish Insurance Federation plays a key role in many issues of common interest to the industry. The Federation must be characterised by professionalism and be well regarded as a trade organisation. With its broad and deep knowledge of insurance, its aim is to contribute to the positive development of the private insurance sector. Financial turmoil In the wake of the financial crisis where the original focus was on banking operations greater attention is being paid to financial products and the key principles of customer protection, transparency and stability. The Swedish Insurance Federation took early action on transparency issues and we can now see pressure mounting both at national and international level for greater transparency in financial operations. Institutional issues, including how a future supervisory framework should be organised, will also become more important. In both the national and international arenas, we will see demands for more regulation, which is not necessarily the best response to the problems we are now witnessing. Throughout the financial crisis, the Federation has been working to clarify to government ministries, the Riksdag (the Swedish Parliament) and the Financial Supervisory Authority the effects of the financial crisis on life insurance companies when both interest rates and share prices fall. The current regulatory framework for life insurance companies may even worsen the financial crisis; in other words, the framework in itself is pro-cyclical. Discussions are also taking place in the EU on measures required to address the pro-cyclicality of the regulations. The Swedish Insurance Federation is following these issues closely and taking action to ensure that the Swedish insurance industry will continue to enjoy positive operating conditions. Increased political contacts Relations with political actors were a priority for the Swedish Insurance Federation in 2008 and will continue to be so. It is essential that we forge constructive, long-term dialogue with the legislator and that our contribution and support in the policy-making process is sought. Good relations with politicians, the Government Offices and agencies enhance the chances that our viewpoints will be considered and yield important results in the long term. During the year, platforms were developed for meetings with political actors. A series of round-table discussions between the Government and the financial sector were launched and will continue in a cooperative body for financial market issues. In light of the financial crisis, this initiative has gained in importance. The Swedish Insurance Federation has played a very active role in establishing this form of cooperation. The Federation held a number of meetings with Members of the Riksdag in 2008; these were very popular and will continue in 2009. These informal meetings present the work of the Federation, explain insurance principles and report on current insurance-related issues. A valuable meeting place for the financial sector and Members of the Riksdag is the Riksdag s Forum for Financial Market Issues. The Swedish Insurance Federation is responsible for the seminars scheduled for the first half of 2009. International influence increasingly important Insurance company operations are increasingly shaped by decisions made at EU level. The Swedish Insurance Federation is, for example, very much involved in Solvency II, the ambitious EU project to reform the solvency system for insurance companies. Over the year, we advanced the work at both national and international level. In particular, we devoted considerable time to meetings with stakeholders in the negotiations to encourage them to support the issue of surplus funds, a crucial issue for the Swedish life insurance industry. Our efforts have yielded results and the outlook for 2009 looks positive. In 2009, our international work will also be influenced by the Swedish Presidency of the EU in the second half of the year. Through intensive dialogue with political actors, the Federation will strive to ensure that important industry issues gain a place on the agenda, both ahead of the Presidency and in the longer term. Initiative on Nordic climate cooperation Climate change will affect us all. For the insurance industry, climate change issues will affect, for example, mitigation measures and risk assessment in various ways. In spring 2008, the Swedish Insurance Federation held a Nordic climate conference for the industry that set the scene for 2

further Nordic cooperation in the climate change area. In 2009, a climate conference with a joint Nordic focus will be held in Copenhagen. Dialogue on the future of social insurance Many different studies, including the Long-Term Survey 2008, clearly state that increased demands for improved social services cannot be met under the current system. In a situation where people s needs for security are increasing and society s resources are shrinking, the insurance industry can play an important role. We support, for example, the current inquiry on motor third-party liability insurance and are working to achieve the necessary conditions for better and faster rehabilitation of people injured in traffic accidents. These social security issues concern the possibility of offering private insurance to complement public insurance, for which there is already a demand today. They highlight the importance, from a long-term perspective, of a joint review of the welfare system by all actors and of achieving broad policy coherence. The insurance industry looks forward to contributing constructively to a dialogue on the future of social insurance. Private insurance is part of our society and we want to be part of the solution. Christina Lindenius Managing Director The Swedish Insurance Federation This is the Swedish Insurance Federation The Swedish Insurance Federation is the trade association for insurance companies operating in Sweden. Its members account for most of the Swedish population s insurance coverage. The main tasks of the Swedish Insurance Federation are to: promote the interests of the member companies and their ability to operate in Sweden and abroad express the member companies common positions in relation to the Riksdag, Government, agencies, organisations and the public foster greater awareness of the importance of private insurance activities for society and the individual conduct studies and make proposals on key issues for private insurance companies provide reviews as the entity responsible for several review boards that issue opinions on disputes between policyholders and insurance companies The Swedish Insurance Federation is a member of CEA, the European insurance and reinsurance federation, and plays an active role in the legislative work at EU level. At national level, the Swedish Insurance Federation, the Swedish Motor Insurers and the Swedish Insurance Employers Association together form the Association of Swedish Insurers. 3

Insurance for a well-ordered society Private insurance coverage is necessary to guarantee economic security for individuals and stability and security for businesses. Insurance protection makes investment and expansion possible and creates economic growth. Insurance involves social awareness and an interest in, for example, climate issues, crime prevention and emergency preparedness. Insurance savings account for a large share of long-term savings and represent a significant portion of capital raising in all sectors. In turn, Swedish Insurance Federation members insurance companies operating in Sweden account for most of the Swedish population s insurance coverage. The insurance sector is part of the country s economic infrastructure and promotes financial stability by enabling better risk management and diversification. Changes in society, therefore, have an impact on the industry. For example, demographic changes, a change in political direction and new or different risks create a need for new insurance products. The current impacts of climate change are among the new challenges facing risk management today. Climate change high on the agenda The ongoing effects of climate change have recently received a great deal of attention and it is clear that they will also have a growing impact on the insurance industry. It is important that greenhouse gas emissions be reduced and prevented and that society adapts to the changes and increased risks these emissions cause. The Swedish Insurance Federation took the initiative to hold a climate change conference for the Nordic insurance industry in April 2008. A decision was taken at the conference to continue Nordic cooperation on environment issues with the aim of signing a joint declaration of intent in 2009. The Danish Insurance Association will host the Nordic climate conference in Copenhagen in autumn 2009. Climate change impacts also direct attention to damage to infrastructure such as roads and sewerage networks. This reopens the question of the dividing line between public and private responsibility, which in turn is important to the private insurance industry. The Swedish Insurance Federation is involved in the public debate on these issues and took part in the inquiry on how costs to municipalities in connection with natural disasters should be managed. In its comment on the inquiry s report, the Federation noted that insurance companies can offer good insurance protection for municipal infrastructure while emphasising that this requires that insurance principles, such as individual risk assessment and clear valuation rules, can be applied. The Swedish Insurance Federation also commented on the final report of the Government s Climate and Vulnerability Inquiry and on the Swedish Climate Policy report. The insurance industry supports the proposals of these inquiries and is confident they will be implemented. In the transport area, the Swedish Insurance Federation is following the EU s work on the general strategy to shift road freight to short sea shipping for environmental reasons. In the area of maritime transport, regulation aimed at preventing environmental disasters in connection with shipwrecks was introduced in 2008. This means, for example, that European ships and other ships that call at European ports are obliged to have liability insurance. Consumer-oriented industry cooperation The Internet portal minpension.se is the result of cooperation between the Government and pension institutions and is managed by Min Pension i Sverige, a Swedish Insurance Federation subsidiary. Minpension.se provides users with an overview of their accrued pension and the option of a personal pension forecast free of charge. In January 2009, Insurance savings account for a large share of long-term savings and represent a significant portion of capital raising in all sectors the number of users exceeded 800 000 and at the same time a new version of the portal was launched. Its functionality was extended and it is now possible to calculate, for example, how temporary changes in income affect pension rights. A pilot project was initiated in early 2009 to enable pension forecasts at minpension.se to be accessed via insurance company and government agency websites. Through the Swedish Insurance Federation, insurance companies provide independent advice via the Swedish Consumers Insurance Bureau. The Bureau s principals are, in addition to the Federation, the Swedish Financial Supervisory Authority and the Swedish Consumer Agency. Consumers can turn to the Bureau for information on insurance products, price comparisons and advice on how to proceed if they are not satisfied with a decision from their insurance company. Insurance companies are also extensively involved in initiatives to prevent damage and injuries, for example, in the traffic and climate areas. Initiatives are taken by single com- 4

panies, in collaboration with others in the industry through the Swedish Insurance Federation, and in cooperation with other actors. One outcome of such joint initiatives is the web-based support for disability certificates now available on the Federation website. Certificate templates, through the agency of the Federation, have been draw up by representatives of individual insurance companies and medical examiners and make the process of issuing certificates faster and more secure for doctors. Emergency preparedness on several fronts When a major crisis occurs, insurance companies are quick to become involved. In 2008, the Swedish Insurance Federation and several other industry organisations took part in the Swedish Emergency Management Agency s National Industry Forum. The objective is to strengthen Sweden s emergency preparedness by facilitating cooperation between the business and public sectors and promoting developments in cross-sectoral and cross-industry emergency preparedness issues. Practical experience of how Swedes have been affected by serious events in other countries demonstrates the importance of effective cooperation between the insurance industry and government agencies. In 2008, the Swedish Insurance Federation extended its involvement with the Ministry for Foreign Affairs in the area of joint preparation for, and management of, crises abroad. The Federation took part in the Committee on the Responsibility of the State in Disasters Abroad, which delivered its final report in March 2008. Among other things, the report emphasised the importance of having private travel insurance. The new Swedish Civil Contingencies Agency launched its operations on 1 January 2009. The Federation s cooperation with the Swedish Financial Supervisory Authority in the emergency preparedness area, also pursued to increase public private partnerships (e.g. FSPOS, the financial sector s public private sector cooperation body), will continue under the new agency. The industry engages in constructive talks on insurance fraud with the police, prosecutors and the Swedish Social Insurance Agency. The aim is to create greater awareness of the problems encountered in private and public insurance and to promote effective legal handling of police reports. Larmtjänst also deals with fraud problems at international level within CEA, the European insurance and reinsurance federation. Today s climate change impacts are going to become increasingly important for the insurance industry in the future Another area that received considerable attention during the year was sea piracy, which has become more frequent especially in the waters off Somalia. These are complex events from an insurance perspective, and to simplify their handling, the risk of sea piracy has been transferred from the more static civil hull insurance to the more flexible war risk hull insurance. This step has been taken in consultation with the Swedish Shipowners Association. Crime prevention work Whether in the public of private compensation system, the right compensation must go to the right person. The industry takes coordinated action against insurance fraud through the Swedish Insurance Federation subsidiaries Larmtjänst and the General Register of Insurance Claims (GSR). Larmtjänst s task is to reduce claims costs for insurance companies and, among other matters, help search for stolen property and prevent attempts to defraud insurance companies. GSR is responsible for the industry s common claims register, which allows insurance companies to check that a claim is not being submitted more than once or to more than one insurance company. 5

Dialogue is the keyword for success In 2008, the Swedish Insurance Federation continued to strengthen its role as a lobbying organisation. Understanding the industry s opinions improves the prospects of success in matters that are important to the industry. Cooperation and constructive dialogue with decision makers were emphasised during the year, and deeper dialogue will be conducted in 2009. It is fundamental to the work of the Swedish Insurance Federation that politicians, government agencies and other decision makers understand the fundamental principles and key role of insurance as part of the economic infrastructure. If not, there is a real danger of important issues being solved in a way that will challenge, or perhaps even obstruct, the efficient functioning of the insurance market. This would in turn have a negative impact on individual consumers and companies alike, and on society as a whole. For this reason, the Federation has intensified its focus on effective and proactive lobbying. Among other things, cooperation and coordination with member companies lobbying activities have been intensified and external networking with relevant organisations has been further expanded. All staff have received further training in the area and a communications department has been established. The Federation s external communications channels, such as its website and press releases, have been reworked to ensure that the Federation s message is conveyed as clearly as possible. In 2008, analysis of statistics production began to provide valuable support to lobbying efforts. More international meeting places Over the year, cooperation at national level was dominated by the Government s desire to strengthen Sweden s financial sector. Round-table discussions between the Government and the financial sector were initiated in the spring. These were extended through a decision to establish a cooperative organisation between the finance sector and the Government focusing on financial market issues. A working group, convened by the Chair of the Swedish Insurance Federation, will present proposals on a joint action plan and set out the forms of cooperation in more detail. The Riksdag s Forum for Financial Market Issues holds seminars for Members of the Riksdag interested in these issues. The four industry organisations in the financial sector have agreed to organise the meetings, and the Swedish Insurance Federation will be responsible for the Forum s secretariat for the first half of 2009. The Forum is a meeting place for professional development and dialogue on financial market issues. Alongside continuous contact at different levels with Riksdag representatives, the Government and agencies in 6 various policy areas, the Swedish Insurance Federation held a series of meetings during the year with Riksdag politicians. The aim of these was to present the work of the Federation, explain insurance principles and report on current insurance-related issues in a clear and simple manner in an informal setting. The meetings were very popular and will continue in 2009. Increased Nordic cooperation The Swedish Insurance Federation attaches great importance to Nordic cooperation. In 2008, cooperation increased in a number of areas including climate change. Via deeper and more systematic Nordic cooperation, we can have a greater impact at European level in CEA and the EU. For example, issues dealt with by the CEA Executive Committee with managing directors from the industry organisations are prepared in close cooperation between the Nordic industry organisations. On Swedish initiative, the managing directors of the Nordic federations now meet on a regular basis. In April 2008, the Swedish Insurance Federation held a Nordic climate conference for the industry, and this has formed the basis of continued, deeper cooperation in the area. The Danish Insurance Association will host the Nordic climate conference in Copenhagen in autumn 2009. Closer Nordic cooperation has also begun on solvency and accounting issues and on transport insurance. New opportunities at European level Just as in society as a whole, EU-level legislation and policies are increasingly dominating the issues that concern the insurance industry and involve the participation of the Swedish Insurance Federation. This is why it is increasingly important for the Federation to exert its influence in CEA, the European insurance and reinsurance federation. Over the last 12 months, CEA has undergone extensive reorganisation and modernisation of its committee structure. This has meant that the Swedish Insurance Federation, as an industry representative from a small country with limited resources, has gained greater influence. During the year, the Swedish Insurance Federation worked much more closely with CEA since the Federation s former Chair, Tommy Persson, took over as CEA Chair at the 2008 General Assembly. The Swedish Insurance Federation lends its support to the work of the Chair. Sweden will hold the six-month rotating Presidency of the EU Council in the second half of 2009. The Swedish Insurance Federation has appointed a project group to report on the issues that are a priority for the insurance industry and that should be on the agenda during the Presidency. The Federation is in close contact with the Government Offices and other industry organisations to highlight the need for priorities in the area of financial markets.

Promoting an understanding of the industry s views enhances the prospects of success on issues that matter 7

Transparency builds trust The financial crisis has put the spotlight on public trust in the financial market and transparency was a priority area for the Swedish Insurance Federation in 2008. Increasing deregulation, competition in the insurance market and, not least, the financial turmoil in autumn 2008 increase the need for consumer access to clear and simple insurance information. This is why transparency issues are high on the agenda, both at EU level and in Sweden. It is also The financial climate has put the spotlight on issues of confidence and trust for the whole financial market the responsibility of the Swedish Insurance Federation, as an alternative to government regulations and legislation, to ensure effective self-regulation in the insurance industry. The transparency projects the Federation is conducting have received a very positive response. Focus on consumer protection Consumer protection in the financial sector has received increased attention both nationally and internationally, not least in light of the financial crisis. The Swedish Insurance Federation is taking action to improve the transparency of insurance products in cooperation with Min Pension, the Swedish Consumers Insurance Bureau, the Swedish Social Insurance Agency and the Swedish Financial Supervisory Authority. Via the Swedish Consumers Insurance Bureau, the industry and government agencies are together providing valuable consumer information and, in so doing, help enhance transparency. The Consumers Insurance Bureau s website presents comparisons of insurance company premiums, sums insured and excesses. Product comparisons An important transparency initiative involves reviewing the possibility of introducing standardised fact sheets for life insurance products. The aim is to simplify product information and enable consumers to compare products. Two working groups comprising representatives from member companies will deliver a final proposal in spring 2009. An equivalent project is being conducted at EU level, giving the Swedish industry an opportunity to work proactively on these issues. Greater comparability and more consistent pension statements have been achieved by revising Pension words, the glossary that provides clear explanations of pension terms. The Federation has played an active part in this project in cooperation with several other actors, including the National Social Insurance Agency. A new pension agency The Government decided to gather the administration of income pensions both the nationel pension and the premium pension in a single government agency. A special pension agency will have the potential to provide clearer and more coherent information to pension savers and pensioners. An implementation inquiry will ensure that the agency is in place by January 2010. The inquiry is interested in the comprehensive pension information that minpension.se can provide, and the Swedish Insurance Federation is taking part in discussions on possible forms of cooperation between Min Pension and the new agency. Other transparency issues that are important to the Federation are the European Commission s work on guidelines for better protection of non-professional investors and the Swedish Financial Supervisory Authority s revision of its information regulations. 8

Solvency II - better consumer protection and increased competition It is important to both the insurance company and its clients that the company has sufficient capital to cover its commitments and risks, in other words, that the company is solvent. The EU s Solvency II project involves reforming the solvency system for insurance companies with the aim of further improving the efficiency and stability of the insurance market. The ongoing work on the EU Solvency II Directive aims to reform and harmonise national solvency provisions for insurance companies in Europe by 2012 at the latest. New provisions will be introduced governing the levels of capital that insurance companies in the EU must set aside to cover their risks and commitments. The new system includes quantitative requirements, qualitative requirements and supervision rules as well as supervisory reporting and public disclosure. In summer 2008, the fourth Quantitative Impact Study on Solvency II was performed. Participation by the Swedish insurance industry was substantial: 23 non-life insurance companies, 17 life insurance companies and four insurance groups took part. This represents an increase of 50 per cent over participation in previous impact studies. The study found that all the participating companies would fulfil the minimum capital requirements. Contributes to efficiency and stability Solvency II will contribute to an efficient and stable insurance market. Calculating the capital requirement based on a particular insurance company s risks will replace the existing volume-based rules. Greater demands will be placed on the ability of insurance companies to manage, measure and control risks. The new framework will boost competition between companies and increase protection for policyholders. It will also let the supervisory bodies gain a deeper understanding of the risks, control and governance of insurance company operations. The Federation takes a broad approach The Swedish Insurance Federation is taking steps to ensure that the new regulations from a European perspective are appropriate for small and medium-sized companies. The Federation conveys the views of the insurance industry to the legislators and other stakeholders via continuous dialogues with Swedish EU parliamentarians, the European Commission, the Swedish Financial Supervisory Authority and the Ministry of Finance. In addition, extensive work is being undertaken in CEA, the European insurance and reinsurance federation, of which the Swedish Insurance Federation is an active member. The proposal for a new and modern regulatory framework for the insurance industry is the work of the European Commission. For a new framework directive to be adopted, the Commission, the European Parliament and the Council of Ministers must reach consensus in negotiations on the content of the regulations. The Directive is then adopted formally by the Parliament and the Council. Regulations on surplus funds are a crucial issue that will determine whether or not Swedish traditional life insurance can meet the new solvency rules. According to the rules, surplus funds must be of a certain level; the issue of surplus funds concerns the position of bonus as buffer capital. To meet the capital requirements, it is important that Swedish traditional life insurance be able to include its bonus in its buffer capital. The Swedish Insurance Federation has been The Swedish Insurance Federation conveys the views of the industry to legislators and other stakeholders, in both Sweden and the EU very active in its efforts to gain the support of various stakeholders for the regulations on surplus funds. Alongside the negotiations on the framework directive, the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) has been working on more detailed regulations and measures to strengthen cooperation between the supervisory authorities in Member States. The report is to be submitted in October 2009. The Solvency II Framework Directive will also include reworking a dozen or so existing EU insurance directives. In 2008, the Commission began reviewing the Occupational Pensions Directive and the Directive on Financial Conglomerates so as to possibly adapt these to or link these with the Solvency II Directive. Implementing the new Framework Directive The final step involves transposing the new Community legislation into Swedish law. All insurance companies will be obliged to adapt their capital and processes to the new regulatory framework. All risks, current and future, will need to be identified, managed, measured and effectively controlled within the framework of an integrated risk management system. This is a prerequisite if the system is to function and must be in place before the system comes into force in October 2012. 9

Improved road safety and better rehabilitation The Swedish Insurance Federation continued its intensive efforts on issues concerning the expansion of motor third-party liability insurance. The government-appointed inquiry on motor third-party liability insurance has been tasked with delivering proposals to enable the transfer of some social insurance costs to motor thirdparty liability insurance. One of the inquiry s key objectives is to propose a system to ensure that claims settlement for people injured in traffic accidents is as prompt, effective and legally secure as possible. Reduced risk and effects of traffic injuries A major problem with today s motor third-party liability insurance is that liability for personal injuries is divided between several different actors, such as insurance companies, employers and the social insurance system. This leads to coordination problems and administrative processes that delay claims settlement to the clear disadvantage of both those injured and the responsible parties. Today s system has obvious deficiencies regarding prompt action to help injured people recover as quickly as possible and return to the lives they led before the injury. Larger and clearer responsibility for insurance companies would also increase incentives for improved road safety, for example, through the greater use of various safety systems in vehicles. Expansion of motor third-party liability insurance could thus reduce both the risks and effects of traffic injuries. Fewer people would be affected by the suffering and financial insecurity resulting from traffic injuries and the total costs to society would be lower. Federation support for the inquiry The Government inquiry on the expansion of motor thirdparty liability insurance was appointed in April 2007. The insurance industry is represented in the inquiry by three experts. The Swedish Insurance Federation has organised the industry s work in this area into two groups comprised mainly of representatives of motor insurance companies. On an ongoing basis, these groups produce position statements on the issues raised and channel these into the inquiry. In this way, the Federation is contributing the support, documentation and expertise needed for sound reform. The Federation also has regular contact concerning motor third-party liability insurance with politicians and civil servants at the Swedish Government Offices. The inquiry is to present its final report on 15 June 2009. The insurance industry considers that, in the first phase, the costs of sickness and disability benefits should be transferred to motor third-party liability insurance. However, there are strong arguments for not making any changes to the existing solutions for sick pay during the employer period through labour market insurances and workers compensation due to road traffic injuries. Far reaching changes in these areas would have incalculable consequences and involve substantial interference in the processing routines. The expansion of motor third-party liability insurance means better processing procedures and faster rehabilitation for the insuree This would require separate consequence analyses, which could jeopardise the timeframe for the entire reform. The responsibility that would follow from transferring the costs to motor third-party liability insurance would create sufficient incentive to develop better road traffic safety and more efficient and effective rehabilitation. Occupational injuries A similar problem exists in the area of occupational injuries, where no single actor has overall responsibility and thus no strong incentives exist to reduce risks and prevent injuries. The Swedish Insurance Federation therefore wants a more in-depth debate on how a compulsory competitive insurance market could handle these problems. The theme of the Federation s Annual General Meeting in 2008 was workers compensation in the autumn the Centre for Business and Policy Studies (SNS) presented its report on the subject initiated by the Federation. Reform of the social insurance system The Government has announced that a parliamentary inquiry on social insurance should be appointed to formulate principles for a coherent, balanced and sustainable social insurance system. In July 2009, a new monitoring agency in the area of social insurance (Inspektionen för socialförsäkringen) will begin operations. In 2009, the Swedish Insurance Federation will join the debate on social insurance and pursue its contacts with politicians and other actors. The starting point will be drawing attention to insurance principles and fostering an understanding of the importance of including the role of private insurance in the debate on the design of future social insurance. 10

Industry statistics Home insurance: a matter of course for most people Percentage with home insurance 95% 5% Source: Statistics Sweden Living Conditions Survey 2006/2007 According to Statistics Sweden s regular survey, 95 per cent of Swedes aged 16 84 are covered by home insurance, a percentage that has remained relatively constant since the early 1990s. In the cohabiting adults with children category, over 99 per cent have home insurance. This can be compared with the single adults with no children category, where just under 89 per cent have home insurance protection. In 2007, home insurance handled half a million claims and the total cost of compensation was just over SEK 5 billion. Insurance: an important part of household savings 4 000 000 3 500 000 3 000 000 2 500 000 2 000 000 1 500 000 1 000 000 500 000 0 2006 Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2008 Q1 2008 Q2 2008 Q3 2008 Q4 Insurance savings, individual Insurance savings, collective excluding PPM Other actuarial reserves Bank deposits Shares Mutual fund units Source: Statistics Sweden Savings Barometer The figure shows the value of Swedish households quarterly financial assets in the 2006 2008 period. Financial market developments resulted in a decrease in value for almost all types of savings at the end of 2007 and in 2008. However, the decrease in the value of insurance savings was less than the decrease in the value of shares and mutual funds. Insurance savings as a percentage of household savings remained approximately 40 per cent throughout the period. 11

Two million people have private pension savings Pension savings in different age categories Insurance companies in Sweden in 2008 The number of companies registered with the Swedish Financial Supervisory Authority 28% National companies 146 of which Unit-linked insurance companies 10 Other life insurance companies 34 Non-life insurance companies 102 19% 25% 0-19 20-24 25-34 35-44 45-54 55-64 65- Local companies 208 of which Large local companies 48 Small local companies 160 Support associations 78 3% 2% 0% 23% Foreign companies, branches and agencies 39 Total 471 Source: Statistics Sweden Private Pension Savings Approximately 2 million people saved via pension products in 2007. The largest category of pension savers is 35 44 yearolds, followed by 45 54 year-olds. For both these categories, the average saving in 2007 was just over SEK 6 000 per person. In 2007, approximately 1.6 million people received some form of pension payment from private insurance. Of these, 1.3 million had occupational pensions and 0.3 million had private pension insurance. The average pension payment was about SEK 37 000 per person. Source: Swedish Financial Supervisory Authority There were 471 companies in the Swedish insurance industry in 2008, comprising non-life, unit-linked and other life insurance operations. According to statistics from the Swedish Insurance Employers Association, in 2008 the insurance industry employed approximately 19,000 personnel, 53 per cent of whom were women. The average age of employees in the insurance industry was 42. 1 1 Only companies affiliated with the Insurance Industry Employers Organisation or the independent employers organisation for cooperative business, KFO, are included in the figures on the number of employees. Unit-linked and other life insurance market shares (insurance exposed to competition) Premium income in 2008: SEK 155 514 million SalusAnsvar 0% Swedbank Försäkring 7% Länsförsäkringar 7% Danica 2% Moderna Försäkringar 2% SPP 5% Avanza 7% Handelsbanken Group 5% Other 1% Alecta 8% Non-life insurance market shares (excluding insurance written via collective agreements) Premium income in 2008: SEK 57 257 million Dina-gruppen 2% Sakförsäkring, Captivebolag 3% Zurich 2% Moderna Försäkringar 2% Other 11% Länsförsäkringar 30% Nordeakonc. 4% Skandiakonc. 16% Folksam 14% AMF Pension 8% Folksam 10% Nordnet 5% SEB 13% Trygg-Hansa 17% If Skadeförsäkring 20% Source: Swedish Insurance Federation quarterly statistics The total premium income accrued from unit-linked and life insurance in 2008 was SEK 155.5 billion, an increase of just under SEK 10 billion over that of the previous year. Source: Swedish Insurance Federation quarterly statistics The total amount is more than 100% due to rounding. Total premium income accrued from non-life insurance in 2008 was SEK 57.2 billion. In 2008, just under 5.4 million home and house insurance policies were written (not including vehicle insurance). The number of policies written for vehicles as at 31 December 2008 was just over 6.5 million, 4 million of which were private car policies. 12

Premium income for non-life insurance by class of business Premium income (SEK million) by class of business Class of business Company and property Home and house Motor third-party liability Motor vehicle Health and accident Pet Maritime, aviation and transport (MAT) Credit Other Total 2006 13 336 11 189 10 916 12 012 4 667 1 572 1 113 602 1 003 56 408 2007 13 988 11 417 10 236 12 499 5 171 1 813 1 141 594 1 000 57 859 2008 13 823 11 395 9 171 12 621 5 680 2 007 1 064 515 1 496 57 772 Premium income for the three largest classes of non-life business decreased somewhat between 2007 and 2008. The classes of business that increased were motor vehicle, health and accident and pet insurance. Total premium revenue fell by 0.2 per cent over the same period. Source: Swedish Insurance Federation quarterly statistics Sharp increase in number of private sickness insurance policies The Swedish Insurance Federation statistics for health and accident insurance show that the number of private sickness insurance policies has risen steeply in recent years. In 2000, over 103 000 people had private sickness insurance. Since then, the number of insured has increased steadily each year, reaching just under 360 000 people in 2007, the increase being sharpest in the last two years of the period. Individuals with sickness insurance paid for by their employer constitute the greater part of the total number of people insured. Number of policies 400 000 350 000 300 000 250 000 200 000 150 000 100 000 2000 2001 2002 2003 2004 2005 2006 2007 Source: Swedish Insurance Federation overall statistics Investment assets of life insurance companies Land and buildings 3% Other financial investments 2% Short-term investments 5% Investment assets of non-life insurance companies Land and buildings 4% Other financial investments 3% Short-term investments 10% Bonds 47% Shares and participating interests 43% Shares and participating interests 25% Bonds 58% Source: Statistics Sweden Assets sets of Swedish insurance companies The total value of life insurance companies investment assets was SEK 1 973 billion at the close of 2008. Overall, the value of life insurance companies capital investments decreased by SEK 170 billion from 2007 to 2008. Compared with the year before, the percentage of life insurance company investments in shares and participating interests fell by about ten per cent and the percentage of investments in bonds increased by about ten per cent. This change partly stems from depreciation due to financial market developments and partly from changed investment strategies. Source: Statistics Sweden Assets of fswedish insurance companies The value of non-life insurance companies investment assets was SEK 448 billion at the close of 2008. However, the composition of investment assets changed from 2007 to 2008, as the percentage of shares and participating interests decreased by three per cent while the percentage of bonds increased by three per cent. 13

Income statement and balance sheet The Swedish Insurance Federation is a non-profit association that conducts some of its activities through its subsidiary Försäkringsförbundet Service AB. Total turnover is about SEK 83.3 million, compared with about SEK 78.9 million in 2007. Revenues are expected to remain stable in 2009 in relation to 2008 and no major changes in net turnover are forecast. Operating expenses are about SEK 82.3 million, compared with about SEK 77.5 million in 2007. Expenses for 2009 are expected to remain stable in relation to 2008. During the year, the Swedish Insurance Federation devoted itself to many issues crucial to the insurance industry, such as solvency rules, extended third-party liability insurance and amendments to health insurance. Several consultation responses were submitted in various insurancerelated areas. The Federation has carried out investigations, information activities and lobbying on insurance matters. The wholly owned subsidiary Försäkringsförbundet Serviceaktiebolag (FSAB) conducts activities financed by the affiliated companies via service fees. The company carries out investigations, supplies statistics and conducts information activities on insurance matters. Larmtjänst AB is a subsidiary of FSAB and works to reduce insurance companies claims costs by means of operations to combat insurance-related crime. There are ongoing discussions in the company concerning the direction of future activities. Skadeanmälningsregister (GSR) AB is a subsidiary of FSAB whose main task is to use its register data to reduce claims payments based on incorrect information and to prevent such claims being made in the first place. The register data and their preventive effect are used to reduce the future claim costs of affiliated insurance companies. The register data can also contribute to better service by allowing faster processing. Min Pension i Sverige AB is a subsidiary of FSAB responsible for developing and operating a public pension Internet portal. This portal aims to establish a long-term solution for the presentation and specification of old age pensions and to increase the number of affiliated pension institutions. This will allow more pension savers to receive specifications and forecast their individual pension situations. Post balance sheet events The Supreme Administrative Court decided against granting leave to appeal in the VAT dispute between Larmtjänst and the Swedish Tax Agency for the years 1996 1997. In a VAT dispute referring to 1998 2002, the Administrative Court of Appeal followed the same line as did the County Administrative Court, and the ruling of the Administrative Court of Appeal will not be appealed. In view of the above, a VAT dispute referring to 2003 will not be referred to the County Administrative Court. The VAT amounts have already been paid to the Swedish Tax Agency. It is proposed that the parent association s non-restricted equity of SEK 828 572 be carried forward. For information about the parent association s results of operations and financial position in other respects, please refer to the income statement and balance sheet and accompanying notes set out below. The Group s and the Federation s results of operations and financial position for the financial year as at 31 December 2008 are set out in the consolidated income statement and balance sheet. These documents, as well as the audit report, can be obtained from the Federation s office. A summary of the consolidated income statement and balance sheet is provided below. Consolidated income statement (SEK) 2008 Consolidated balance sheet (SEK) 2008 Operating income Operating expenses Depreciation of equipment Operating profit Interest income Interest expense Profit/loss after financial items Tax 83 343 120-81 799 802-1 162 977 380 341 1 129 283-24 766 1 484 858-1 114 025 Equipment Long-term receivables Current receivables Short-term investments Cash and bank balances Total assets 2 124 115 43 122 718 14 226 164 2 288 619 17 315 591 79 077 207 Profit for the year 370 833 Restricted equity Non-restricted equity Long-term liabilities Other current liabilities 60 000 7 288 640 43 068 840 28 659 727 Total liabilities and equity 79 077 207 14

Board of Directors and committees The Board Chair Torbjörn Magnusson, If Deputy chair Anders Mossberg, SEB Trygg Liv Board members Håkan Danielsson, Länsförsäkringar Christer Elmehagen, AMF Pension (until 30 March 2008) Rickard Gustafson, Trygg-Hansa Bertil Hult, Skandia Christina Lindenius, Swedish Insurance Federation Tomas Nicolin, Alecta Lars Nordstrand, Moderna Försäkringar Anders Sundström, Folksam Michael Zell, Handelsbanken (until 2 March 2009) Alternates Britta Burreau, Nordea Liv & Pension Bengt-Åke Fagerman, Skandia Göran Holgerson, SPP Ann Sommer, Länsförsäkringar Committees Life insurance committee members Bengt-Åke Fagerman, Skandia Christina Lindenius, Swedish Insurance Federation Gunnar Andersson, Folksam Jonas Ardhe, Swedbank Försäkring Claes Carlson, Danica Pension Mikael Claesson, Moderna Försäkringar Jonas Derninger, Länsförsäkringar Per Harryson, SEB Trygg Liv Henrik Källén, Avanza Pension Cecilia Lager, Alecta Camilla Larsson, AMF Pino Roscigno, SPP Non-life insurance committee members Ann Sommer, Länsförsäkringar Christina Lindenius, Försäkringsförbundet Johan Hedensiö, Trygg-Hansa Mats Nordenskjöld, If Eva Tidefelt, Folksam Birger Nydrén, Zurich Bo Lundgren, Dina Försäkringar Seated (from left): Anders Sundström, Folksam; Håkan Danielsson, Länsförsäkringar; Bertil Hult, Skandia; Lars Nordstrand, Moderna Försäkringar; Torbjörn Magnusson, If; Christina Lindenius, Swedish Insurance Federation; Bengt-Åke Fagerman, Skandia; Anders Mossberg, SEB Trygg Liv; Tomas Nicolin, Alecta. Standing (from left): Britta Burreau, Nordea Liv & Pension; Snorre Storset (co-opted, Handelsbanken Liv); Ann Sommer, Länsförsäkringar; Rickard Gustafson, Trygg-Hansa. 15

Members AIG Europe S.A. COO: Ralph Brand Folksam CEO: Anders Sundström SalusAnsvar AB CFO: Lennart Krän Alandia Managing Director: Leif Nordlund FPK Managing Director: Åke Gustafson SEB Trygg Liv CEO: Anders Mossberg Alecta CEO: Staffan Grefbäck GAR-BO Managing Director: Lennarth Åstrand Sirius International CEO: Göran Thorstensson Allmänna Änke- och Pupillkassan i Sverige Managing Director: Lars Nylén AMF President and CEO: Ingrid Bonde Aspis Liv Managing Director: Jan Paju Avanza Pension CEO: Henrik Källén Bliwa CEO: Kristina Åkerstrand Bohusläns Allmänna Sjöförsäkringsförening Managing Director: Bengt Schröder Brandförsäkringsverket In liquidation. Liquidator: Alf Guldberg Brandkontoret Managing Director: Björn Kårfalk Cardif Nordic Managing Director: Jan De Geer Danica Pension Managing Director: Claes Carlson Dina Försäkringar Managing Director: Bibi Sandberg Europeiska Reseförsäkringar CEO: Kenneth Sandén Genworth Financial Country Manager, Sweden: Tobias Ohlsén Gjensidige CEO: Per Fornander Handelsbanken Liv CEO: Snorre Storset Hannover Re Managing Director: Thomas Barenthein If President and CEO: Torbjörn Magnusson KPA Managing Director: Bertil Repfennig Länsförsäkringar Managing Director: Håkan Danielsson LRF Försäkring Managing Director: Larsåke Adebring Markel International Sweden General Manager: Ove Staaf Moderna Försäkringar Managing Director: Lars Nordstrand Nordea Liv & Pension CEO: Britta Burreau Pensionsgaranti President: Peter Lindblad QBE Insurance Ricky Kronow Skandia Head of Nordic Division: Bertil Hult SPP CEO: Sarah McPhee Sveland Försäkringar Managing Director: Anders Strand Swedbank Försäkring Managing Director: Per-Erik Gullnäs Sweden Re Managing Director: Fredrik Sundberg Swedish Club Managing Director: Lars Rhodin Trygg-Hansa Managing Director: Rickard Gustafson Vesta Skadeförsäkring Managing Director: Peter Appelros Zurich General agent: Fredrik Rosencrantz Full contact details are available on the Swedish Insurance Federation website: www.forsakringsforbundet.com 16

Insurance for a well-ordered society Private insurance guarantees economic security, safety and stability. The protection that insurance provides is also one of the conditions that allow people and society at large to take the risks needed to create growth. In 2008, the work of the Swedish Insurance Federation was characterised by a stronger intention to forge constructive and long-term dialogue with politicians and other decision makers on issues crucial to the industry. PRODUCTION: SWEDISH INSURANCE FEDERATION/ASSOCIATION OF SWEDISH INSURERS PHOTO: STEFAN SPENDRUP ILLUSTRATIONS: DEJAN MAUZER PRINTED BY: JERNSTRÖM OFFSET Swedish Insurance Federation Box 24043 104 50 Stockholm MILJÖMÄRKT www.forsakringsforbundet.com 341 376 TRYCKSAK