(23,905). There was a gradual improvement during the year.
Sales during the fourth quarter were 35 per cent higher than in the corresponding period of last year.
SEB Trygg Liv’s sales focus is on unit-linked insurance, representing 85 per cent (74) of total sales. Sales of unit-linked insurance increased by 36 per cent. SEB Trygg Liv’s market position was continuously improved during the year and resulted in a market leader position within new sales of unit-linked insurance. The market share was 29.1 per cent (21.2).
Sales of occupational pension represent close to 75 per cent of total sales and increased by more than 20 per cent. During 2003 SEB Trygg Liv became market leader within occupational pension unit-linked insurance, too. The strengthened position is a result of continuing efforts to make the business more long-term and less dependent on the general business cycle.
Improved co-operation with insurance brokers and other divisions of SEB as well as the forming of the Stora företag entity (Large companies), have contributed to the positive development. The proportion of total sales through insurance brokers was 65 per cent (52).
Sales of private pension insurance represent only 6 per cent of total sales, but increased by 36 per cent, deriving from unit-linked. The sales of endowment insurance, strongly affected by earlier years’ negative stock market development, started to recover and increased by 5 per cent in total.
Premium income, that is paid-in premiums, decreased by 6 per cent, to SEK 13,223m (14,024). However, during the sec-ond half of the year total premium income increased by 2 per cent and, for the Swedish operations, by 7 per cent.
Unit-linked insurance accounts for two thirds of premium income. In addition to premium income, payments into Individual Pension Savings (IPS) totalled SEK 629m (644) and into Premium Pension SEK 584m (539).
The best result to date
The operating result from unit-linked insurance increased to SEK 149m (40) and was the best result ever. Growing asset values from unit-linked, an increasing share of equity funds and higher sales volumes explain the increase in income.
Lower administration and other costs compensated for higher sales commissions.
The result that includes change in surplus values, “Result from ongoing business”, SEK 1,888 (1,343), was the best ever, due to higher sales volumes and improved product profitabil-ity. The surplus value – present value of written insurance poli-cies – is calculated to better evaluate the insurance operations.
Total surplus value (value of in force business) amounted to SEK 5.2bn at the end of 2003. These values are not included in the SEB Group’s consolidated profit and loss account or bal-ance sheet. For more details, see Note 56.
Strengthened market position, strong result improvement.
SEB Trygg Liv
The business concept of SEB Trygg Liv is to offer customers security throughout life with the help of insurance and security solutions. It offers private individ-uals and companies a complete range of products in the field of social security such as pensions, occupational pensions, health insurance, nursing insurance and rehabilitation insurance. In addi-tion, SEB Trygg Liv offers endowment insurance and is responsible for the IPS product (Individual Pension Savings) as well as for premium pension activities. As an added value customers are offered secure housing for senior citizens.
SEB Trygg Liv has a little over 1 million customers. Its activities are focused on the sale and administration of unit-linked insurance prod-ucts and their equivalent for account of the traditional mutual life insur-ance companies Nya respectivley Gamla Livförsäkringsaktiebolaget SEB Trygg Liv. These companies are not consolidated with the SEB Trygg Liv Holding Group, which only receives a fee for the administra-tive and sales services provided.
2003 2002
Percentage of SEB’s staff 4 4
Percentage of SEB’s operating result 2
Profit and loss account
Change,
SEKm 2003 2002 per cent
Total income 1,450 1,408 3
Total costs -1,291 -1,354 -5
Result from associated companies -10 -14 29
Operating result1) 149 40
Change in surplus values, net 1,739 1,303 33 Result from ongoing business2) 1,888 1,343 41
Change in assumptions -94 -447 -79
Financial effects of short-term
market fluctuations 296 -1,727 -117
Total result, net 2,090 -831
Allocated capital, SEKm 4,300 3,900 Return, ongoing business, % 31.6 24.8 Number of full time equivalents,
average 721 779
1) In the SEB Group reporting, SEB Trygg Liv is accounted for according to the same principles as associated companies – one-line accounting. Accordingly, only the operating result is consolidated in the SEB Group’s accounts. More detailed information about SEB Trygg Liv can be found in “Additional information”, available on www.sebgroup.com
2) An insurance company´s costs for an insurance policy mainly arise when the contract is written. On the other hand, income accrues regularly throughout the duration of the policy. This means that in periods of rapid growth in the insurance portfolio, actual costs exceed income, which thus has a negative impact on the operating result. At the same time, surplus values in operations increase. in order to provide a more true presentation of the life insurance business, the total result is presented including the current period change in surplus values being the pre-sent value of future profits from existing insurance contracts.
Anders Mossberg Head of division FACTS SEB TRYGG LIV
sickness absence and associated costs within companies. This should supplement the new health and medical care insurance schemes that SEB Trygg Liv has on offer.
The safe-living concept called BoViva in the town of Halm-stad was ready for occupation in 2002 and a successor to the concept has been planned and negotiated during 2003. The purpose of the concept is to offer SEB Trygg Liv’s customers added value in the form of safe living for the elderly. BoViva offers flats with tenancy rights and access to service and care.
The ambition is to start two new BoViva installations during 2004.
Gamla and Nya Livförsäkringsaktiebolaget
The operations of Gamla and Nya Livförsäkringsaktiebolaget SEB Trygg Liv comprise traditional life insurance (i.e. not unit-linked insurance). These companies are run according to mu-tual principles, i.e. do not pay dividend and are therefore not consolidated in SEB Trygg Liv’s or SEB’s accounts. Gamla Livförsäkringsaktiebolaget is closed for new business while Nya Livförsäkringaktiebolaget, which was established in 1997, is open for new business.
The sales margin for new business improved substantially and was 18.1 per cent, compared to 15.9 per cent in 2002 and 11.1 per cent in 2001. As a result of improved margins and in-creased sales volumes, new business profit inin-creased to SEK 500m (380).
Other activities in 2003
Due to falling stock markets earlier, customer increasingly de-manded flexible solutions through which investment changes could be made without personal action on the part of the cus-tomer. Accordingly, two new fund-in-funds were made avail-able within unit-linked insurance. During 2004, new services will be offered in order to help customers make reinvestments.
Extensive work for preparing the introduction of right to transfer insurance policies was carried out during the whole year. At mid-year 2003, transfer rights were introduced for pri-vate pension insurance within unit-linked insurance and, effec-tive on 1 January 2004, for parts of the colleceffec-tively agreed-upon occupational pension within unit-linked insurance. Transfer rights for other occupational pensions will be introduced in the second half of 2004. As regards traditional insurance, the poli-cyholder organisation Trygg-Stiftelsen has earlier voted against such rights.
Continued efforts were made to make the processing of cus-tomer matters more efficient and the established goals as to how fast matters should be handled were achieved. Another example of increased service was the gradual improvement of written information. The importance of this was emphasised by a debate in the media during the year. Intensified efforts are
SEB Trygg Liv
Volumes
SEKm 2003 2002
Sales volume1)insurance
Total 27,650 23,905
Traditional life insurance 4,039 5,974
Unit-linked insurance 23,611 17,931
Premium income
Total 13,223 14,024
Traditional life insurance 4,410 4,974
Unit-linked insurance 8,813 9,050
Assets under management
Total 228,000 210,500
Traditional life insurance 171,600 165,400
Unit-linked insurance 56,400 45,100
1) Measured as weighted volume: single premiums + 10 times regular premiums
Skandia 26.5 (32.5)
SEB Trygg Liv 29.1 (21.2)
SHB & SPP 12.1 (15.5)
Länsförsäkringar 9.5 (7.7)
Robur 9.2 (10.0)
Folksam 4.8 (4.9)
Nordea 0.9 (2.0)
Others 7.9 (6.2)
New Business Unit-Linked Occupational Pension
%
Skandia 25.3 (32.5)
SEB Trygg Liv 27.5 (23.1)
SHB & SPP 15.2 (20.9)
LF 11.0 (9.8)
Robur 7.1 (3.7)
Folksam 4.7 (3.2)
AMF 4.5 (3.0)
Danica 3.0 (2.8)
Others 1.7 (1.0)
Market share of new business of unit-linked insurance
%
Source: The Swedish Insurance Federation Source: The Swedish Insurance Federation
ance on the value statement and the shortfall affects other poli-cyholders. No one-off reallocation, i.e. write-down of the value of the insurance policies, was made.
In addition, the Boards decided to set a new goal for the col-lective consolidation ratio: 100–115 per cent (previously 105–
115 per cent). This lower limit is a better reflection of what is desirable and fair in the long run and is in line with prevailing standards within the industry.
According to the policy of the companies this consolidation ratio goal should be reached within a period of 36 months from the date on which it fell below this level. As per 1 October 2004, both Gamla and Nya Livförsäkrings-aktiebolaget should be back at a minimum consolidation ratio of 100 per cent.
Policyholder influence
Gamla Livförsäkringsaktiebolaget SEB Trygg Liv has a policy-holder organisation, Trygg-Stiftelsen, for the purpose of ensur-ing policyholders’ influence over the company. Trygg-Stiftelsen has the right to appoint two Board members in the company and, together with SEB, the Chairman of the Board, which
con-SEB Trygg Liv
Sales margin
SEKm 2003 2002
Sales volumes weighted
(regular + single/10) 2,765 2,391
Present value of new sales
(9% disount rate) 1,409 1,181
Selling expenses -909 -801
Profit – new business 500 380
Sales margin 18.1% 15.9%
sists of five members. Moreover, Trygg-Stiftelsen has the right to appoint the majority of the members and the Chairman of the Finance Delegation, which is responsible for managing the assets of Gamla Livförsäkringsaktiebolaget.
Sensitivity analysis
A change of the discount rate by +1 percentage point/–1 per-centage point changes the surplus value by SEK –656m/+765m.
A change in the growth assumption rate of the fund units by +1/–1 percentage unit changes the surplus value by SEK +723m/–629m.
As per 31 December 2003 Gamla Liv Nya Liv
Assets under management, SEKbn 162 10
Result of the period
after tax on return, SEKm 11,025 109
Premium income, SEKm 2,980 1 430
Collective consolidation ratio1),
retrospective reserve, % 96 99
Bonus rate, % 0 1
Solvency ratio2), % 155 108
Capital base, SEKm 52,186 753
Required solvency margin, SEKm 4,067 450
Solvency quota3) 12.9 1.7
Total return, % 9.9 4.1
Share/Exposure of equities
in investment portfolio, % 34 3
Share of fixed income, % 58 97
Share of real estate, % 8 0
1) The collective consolidation ratio shows the company’s assets in relation to its commitments to policyholders. The commitments include both guaranteed and not-guaranteed values.
2) The company’s net assets (incl. share capital and subordinated debts) in relation to the guaranteed commitments in the form of technical provisions.
3) Quota capital base/required solvency margin.