Annual Review 2013
Your security is what
we care about.
Come along and get to
know us better.
Welcometothe
customers’insur-
ancecompany
Every time we meet a customer, we also meet an
owner. And we have many owners. W...
Goodshallbebetter
ThisisFolksam
Customer-owned
Aneventful2013
Thelarger,thesafer
Offersforeveryneed
Anorganisationwiththec...
4
Goodshall
bebetter
Folksam is the customers’ insurance com-
pany. For more than a century, we have
combined heart and mi...
5
Jens Henriksson
Age: 47 years
Family: Married and has three
children, lives in Hägersten in
southern Stockholm.
Began as...
6
Thisis
Folksam
Folksam is a customer-owned company. This means that
our customers are our owners and that our surplus go...
7
Didyou
knowthat....
Folksam in figures
Total premium volume	 SEK 40.4 billion
Number of employees		 3,640 people
Total a...
8
ThestoryofFolksamisthe
storyofourcustomers
The basic idea of all insurance is to distribute the risk across more people....
9
Every
time we
meet a
customer,
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.
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 mi...
12
Fredrik Josefsson
Owner since: 2007
Fredrik invents games for the
mobile phone and likes industrial
design for fun.
13
The plastic can Fredrik is holding in his hand costs around
SEK 400. Still, it is completely empty. “The top is also
th...
14
Beathe Rörstrand
Owner since: 2005
Beathe works as a service tech-
nician supervisor and loves her
motorcycle.
15
Idon’ttakeanylongtripsexactly,
butalotofweekendtours.
Beathe’s black used Harley-Davidson Sportster is from
2001 and sh...
16
17
Youareinvolvedandhave
influence
Folksam is a mutual company. This means that our customers are also our owners.
For us,...
Aneventful
2013Market share grew
The market shares grew in both the general and life opera-
tions. Nearly one out of five ...
Årets livbolag 2011 och 2012
Du är en
vinnareigen!
19
Life Insurance Company of the Year again
Folksam was named the Life ...
20
Thelarger,thesafer
The basic idea of all insurance is to distribute the risk across more people. Conse-
quently, size i...
21
	2009	 2010	 2011	 2012	 2013
350
300
250
200
150
100
50
0
assets under management 2009
	 2013 	 SEK 304 billion
	 2012...
22
Offersforeveryneed
We work with life and non-life insurance operations under several brand names with a focus
on the Sw...
Anorganisationwith
thecustomerinfocus
Folksam is organised into three business areas: Private, Partner and Collectively Ag...
24
Growingnumbersof
customersarechoosingus
We are continuing to grow in both the life and non-life markets. More customers...
25
Personal risk
The premium volume for personal risk was stable during
the year.We offer trade unions, companies and orga...
26
Strongfinancial
position
The solvency ratio is the most important measure of financial strength for a life insurance
co...
27
Folksam Life at year-end
Solvency ratio 161%
Collective funding ratio 120.4%
Bonus interest 6.0%
Total return 2013 7.6%...
The combination discounts and bonus are examples of steps
we have taken in recent years. What the customers think and
what...
2929
High-profile
corporate
governance
Our customers care about how listed companies handle the issues of sustainability.
We in...
31
UN principles guide Folksam
The UN Principles for Responsible Investment (PRI) are
a UN initiative launched in 2006 and...
Carina Lundberg Markow
Head of Responsible Ownership
32
When I came to Folksam
in 2001, I saw the traffic
researchers as role models.
She has been called troublesome and powerful...
Apioneerinsustainability
issues
Folksam has the ambition of being on the forefront in environmental and climate work and
h...
35
Clear guidelines for business travel
Our travel policy provides all employees with clear guide-
lines for business trav...
Karin Stenmar
Environmental and Climate
Manager at Folksam
36
37
The environmental and climate
issue permeates all we do in
Folksam.
“Nobody will be able to afford insurance in the fut...
38
World-famous
trafficresearch
The knowledge Folksam’s traffic research provides is used to save lives in traffic. Fewer
...
39
The study is based on just over 55,000 injuries reported by
the emergency hospitals in Sweden between 2003-2012.The
res...
40
Folksam has a long history as an insurance provider and
partner for Swedish sports. Through cooperation with most
of th...
Knee control
Knee injuries are common in
football and teenage girls are
especially affected. The knee
control project is a...
42
Attractive
employer
As Sweden’s largest insurance company with several
subsidiaries, Folksam can offer many interesting...
43
Safe and stimulating working
environment
We shall have a work environment that
promotes good health, motivation and
pro...
44
Assetmanagement
Folksam is one of Sweden’s ten largest investors and manages assets of SEK 304 billion.
The customer’s ...
Management Mandates
Folksam’s asset management determines how assets are
invested within the limits decided on by the boar...
46
Strategic company holdings
Corporate strategic investments are investments of
particular strategic importance to each p...
47
Riskmanagement
–ankeypartofthebusiness
A fundamental part of our business is assessing and managing risks. Through acti...
Ylva Wessén
Manager of Risk Compliance in
the Folksam General Group
48
49
Control is about responsibility
toourcustomersandemployees.
Risk and Compliance is responsible for following up that Fo...
50
Newrulescontrol
development
Insurance is an important part of society’s safety net. Demands on the insurance industry
f...
51
52
Fourbrands,twoGroupsand11
insurancecompanies
Folksam comprises the two parent companies Folksam ömsesidig sakförsäkring...
53
FolksamGeneral
Svenska
Konsument-
försäkringar Tre KronorFörenade Liv SalusAnsvar
Folksam
Non-life
insurance
51%
Folksa...
54
FolksamGeneral
Folksam General conducts property and casualty insurance business focused chiefly
on the Swedish market....
55
Significant events during
the financial year
The boards of Folksam Life and Folksam General ap-
pointed Jens Henriksson...
56
Five-year summary and key ratios, SEK million
GROUP 2013 2012 20111
2010 20092
Earnings
Premiums written (after reinsur...
57
Five-year summary and key ratios, SEK million
PARENT COMPANY 2013 2012 1
2011 2010 2
2009
Earnings
Premiums written (af...
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
Folksam - Annual Review 2013
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Folksam - Annual Review 2013

  1. 1. Annual Review 2013 Your security is what we care about. Come along and get to know us better.
  2. 2. Welcometothe customers’insur- ancecompany 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 in- surance and savings industry. Every time we meet a customer, we also meet an owner. Every- thing 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. Ourjobistocreatesecurityforyou and everything you care about. We work based on your needs when we design our offerings.
  3. 3. Goodshallbebetter ThisisFolksam Customer-owned Aneventful2013 Thelarger,thesafer Offersforeveryneed Anorganisationwiththecustomerinfocus Growingnumbersofcustomersarechoosingus Strongfinancialposition Thecustomersaremoresatisfiedthanever High-profilecorporategovernance Apioneerinsustainabilityissues World-famoustrafficresearch Weinsurenineoutoftenathletes Attractiveemployer Assetmanagement Riskmanagement-apartofthebusiness Newrulescontroldevelopment Fourbrands,twoGroupsand11insurance companies FolksamGeneral FolksamLife FörenadeLiv KPAPension Groupmanagementandboards 4 6 8 18 20 22 23 24 30 34 38 40 42 44 47 52 54 58 64 66 72 Contents 26 28 50
  4. 4. 4 Goodshall bebetter Folksam is the customers’ insurance com- pany. 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, en- joyed 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 stead- ily growing. Nearly one out of five pension savers currently chooses us. Focus on existing customers is a success factor. Gather- ing 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 impor- tant 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. Agrowing stock yields more claims and sets higher require- ments 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 - creat- ing 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 suc- cesses 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 mod- ernisation, 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 insur- ance 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. 5. 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 2013. 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 Sec- retary at the Ministry of Finance. Jens has also been a columnist for the news magazine Fokus and the Swedish daily Svenska Dagbladet.
  6. 6. 6 Thisis 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. 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 long- term return on their pension savings. Both Folksam Life and the subsidiary KPA Pension have significantly more assets than are needed to pay out the guaran- teed 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. 7. 7 Didyou knowthat.... 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% ... Folksam has existed for more than a century ... we influence traffic safety through our world-renown traffic research ... we are the insur ance company of sports and insure nine out of ten athletes in Sweden ... nearly one out of two Swedes are insured by Folksam ... nearly one out of five new pension savers chooses us ... we have worked with sustainable investments since 2001 and have ethi- cal criteria on all assets under management
  8. 8. 8 ThestoryofFolksamisthe storyofourcustomers 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. 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 entrepre- neurs. 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 aboutThey are our owners. In the following pages, you will have the opportunity to meet a few of them.
  9. 9. 9 Every time we meet a customer, we meet an owner. Meet Jessica, Fredrik and Beathe who are all involved and own Folksam.
  10. 10. 10 Jessica Nyberg Owner since: 1995 Jessica works in an art materials store and loves climbing.
  11. 11. 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 inThai- land, 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. 
  12. 12. 12 Fredrik Josefsson Owner since: 2007 Fredrik invents games for the mobile phone and likes industrial design for fun.
  13. 13. 13 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 mate- rial 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.”  You can even fill the machine with metal.
  14. 14. 14 Beathe Rörstrand Owner since: 2005 Beathe works as a service tech- nician supervisor and loves her motorcycle.
  15. 15. 15 Idon’ttakeanylongtripsexactly, butalotofweekendtours. 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.Afast 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.” 
  16. 16. 16
  17. 17. 17 Youareinvolvedandhave 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 Folk- sam 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 2012.The bonus rate in Folksam Life was increased twice in 2013 and is currently 6.0 per cent. Internalaudit TheCustomer Ombudsman Externalauditors NominationCommittee Auditcommittee Remuneration Committee Functionsforinternal governanceand control Policyholders Represented by del- egates at the General Meeting. 80 people in Folksam General and 75 in Folksam Life. GeneralMeeting Board CEO Groupmanagement Financecommittee
  18. 18. Aneventful 2013Market share grew The market shares grew in both the general and life opera- tions. 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 ITPcollective agreement area. ITPis 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 compe- tencies 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 2015. Most sustainable company KPAPension was named the most sustainable company in the finance industry in 2013. Folksam ended up third on the same list. Home insurance received highest marks Our most extensive home insurance received the high- est marks in a comparison done by Konsumenternas Försäkringsbyrå. Konsumenternas Försäkringsbyrå has the goal of providing consumers impartial facts and guidance free of charge. 18
  19. 19. Årets livbolag 2011 och 2012 Du är en vinnareigen! 19 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. 20. 20 Thelarger,thesafer The basic idea of all insurance is to distribute the risk across more people. Conse- quently, 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. 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 insur- ance market Folksam’s market share of the total premium volume in the Swedish insur- ance market was nearly 15 per cent in 2013. 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. One out of five new pension sav- ers chooses us Two million people save for their pen- sions with Folksam.The market share measured in total premium income for life insurance amounted to 14.4 per cent in 2013.This means that the premi- um income for old and new insurance policies was SEK 27 billion of the total market of SEK 185 billion. Market share NON-LIFE INSURANCE Länsförsäkringar 29,8% If 18,3% Trygg-Hansa 16,1% Folksam 15,9% Moderna 3,4% Övriga 16,5% Folksam 15,9% Market share total life market 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% Folksam 14,4% LARGEST PREMIUM VOLUME IN THE INDUSTRY Source: Swedish Insurance Federation and pertains to premium volume December 2013 and previous 12 months. 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Unit-linked, collective agreement and other life insurance Non-life insurance Premiums paid in, SEK billion Folksam LF Skandia Alecta AMF SEB Swedbank IF TryggHansa Nordea SHB Avanza Danica
  21. 21. 21 2009 2010 2011 2012 2013 350 300 250 200 150 100 50 0 assets under management 2009 2013 SEK 304 billion 2012 SEK 275 billion 2011 SEK 253 billion 2010 SEK 235 billion 2009 SEK 215 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. 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 environ- ment, human rights and anti-corrup- tion and are invested in interest-bear- ing securities, shares, properties and alternative investments. Folksam’s holding of interest-bearing securities mainly consists of bonds issued by the Swedish government, Swedish munic- ipalities, Swedish mortgage institutes or Swedish companies. 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 Good risk diversification in the portfolio
  22. 22. 22 Offersforeveryneed 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. Our job is to provide security to our customers through good insurance solutions. Pension savings We offer traditional life insurance within Folksam Life and KPAPension.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, KPAPensionsförsäkring 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 KPAPension, the range of funds consists of SRI-screened funds. Folksam LO Fond- försäkring 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 KPALivförsäkring. Our group insurance com- prises 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-recur- ring 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 organisa- tions, and those for individual solutions. Non-life insurance Folksam offers non-life insurance in three companies; Folksam General, Folksam Skadeförsäkring andTre Kro- nor.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, Me- dium 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. 23. Anorganisationwith thecustomerinfocus Folksam is organised into three business areas: Private, Partner and Collectively Agreed Business and subsidiaries. In addition, there are seven central units. The Private business area is responsible for sales and cus- tomer 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. 23 Folksam General Förenade Liv Svenska Konsument- försäkringar Tre Kronor Försäkring Folksam Skadeförsäkring (Finland) Salus Ansvar Group-wide units Product and Claims Private business Partner Collectively Agreed Business Folksam Life Folksam LO Pension KPA Pensionsförsäkring KPA Livförsäkring Folksam Unit-linked insurance TheCustomers
  24. 24. 24 Growingnumbersof customersarechoosingus 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. Premiums comprise premiums earned in PC insurance, premiums written in life insurance, and receipts and fees from unit-linked insur- ance investors. TOTAL PREMIUM VOLUME 2013 SEK 40,438 million 2012 SEK 35,226 million 2011 SEK 33,263 million 2010 SEK 30,496 million 2009 SEK 29,356 million 2009 2010 2011 2012 2013 40 30 20 10 0 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. 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 contin- ued to grow in 2013. 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 devel- opment of the offering for the individual occupational pension market, occupational pensions from employers who do not have collective agreements. 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 2009 2010 2011 2012 2013 18 16 14 12 10 8 6 4
  25. 25. 25 Personal risk The premium volume for personal risk was stable during the year.We offer trade unions, companies and organisa- tions adapted group life and health and accident insur- ance.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 sup- plements 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. 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 insur- ance with us should be rewarding and the number of cus- tomers 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 contin- ued growth in the Swedish non-life insurance market and expands the collaboration with white-collar workers and university graduates. 25 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 10 8 6 4 2 0 2009 2010 2011 2012 2013
  26. 26. 26 Strongfinancial 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. The solvency ratio in KPAPension 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. Ahigh 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 KPAPen- sion amounted to 7.6 per cent and 8.2 per cent, respectively. Seen over the last five-year period 2009-2013, the average total return on traditional insurance has been 8.0 per cent for Folksam Life and 8.3 per cent for KPAPension. 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 2012.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. Disburse- ments 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 in- creased from 4.5 per cent before taxes and fees to 5 per cent inApril 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 dis- tributed to the policyholders) is above the set target level. KPAPension 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 KPAPension.The rate of return for 2013 was 8.0 per cent. Solvency ratio Folksam Life 2013 161 % 2012 144 % 2011 134 % 2010 158 % 2009 149 % 175 150 125 100 75 50 25 0 2009 2010 2011 2012 2013
  27. 27. 27 Folksam Life at year-end Solvency ratio 161% Collective funding ratio 120.4% Bonus interest 6.0% Total return 2013 7.6% Average return 2009-2013 8.0% Folksam General at year-end Solvency ratio, Parent Company 149.3% Combined ratio 103% Total return 2013 7.7% Cooperative occupational pension at year-end Collective funding ratio 118.4% Bonus interest 6.0 % KPA Pension at year-end Solvency ratio 172% Collective funding ratio 100% Rate of return 8.0% Total return 2013 8.2% Average return 2009-2013 8.3% Glossary Solvency ratio The relationship between assets and technical pro- visions to cover future insurance commitments. Collective funding ratio The ratio between asset values and the com- pany’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. Total return five-year average 2009-2013 Branschen 7,8 % Folksam Life 8,0 % KPA Pension 8,3 % 10 8 6 4 2 0 Branschen Folksam Life KPA Pension Total return Folksam Life 2013 7,6 % 2012 7,0 % 2011 6,5 % 2010 8,7 % 2009 10,3 % 10 8 6 4 2 0 2009 2010 2011 2012 2013
  28. 28. 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 custom- ers 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. Thecustomers aremoresatis- fiedthanever 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. The competition for customers is increasing at the same time that the differences between the players are decreas- ing. Consequently, how we handle contact with custom- ers 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 ex- ceeded 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 under- stand how insurance works, we are also working to make both the products and the information about them simpler and clearer for a better experience. 28
  29. 29. 2929
  30. 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. 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 KPAPension 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 Envi- ronmental 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 be- lieve 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, atAGMs and by conducting an active dialogue for con- structive changes. 30 Folksam's work on Corporate Governance 2013 2012 2011 2010 2009 2008 2007 2006 2005 Number of companies with which Folksam has engaged in active dialogue 31 45 57 77 45 38 41 7 14 Number of Swedish general meetings in which Folksam participated 43 39 421 39 35 28 21 18 15 Nomination committees of which Folksam is a member 2 3 2 3 4 2 1 1 Includes an extraordinary general meeting
  31. 31. 31 UN principles guide Folksam The UN Principles for Responsible Investment (PRI) are a UN initiative launched in 2006 and aimed at introduc- ing 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 invest- ment 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 imple- mentation of the Principles for Responsible In- vestment within the investment industry. Principle 5 Folksam will work together with other inves- tors 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 represent- ed 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 re- viewed, 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 foreignAGMs. Among other matters, we voted for proposals that Sta- toil 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 2013. Ericsson re- ceived the highest rating for its work with human rights andVolvo received the highest rating for its environ- mental efforts. Ericsson received the year’s highest total rating in terms of both human rights and the environ- ment. • 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 coor- dinate corporate governance activities for the environ- ment, 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 “ACatAmong the Pigeons” (www.agarstyrning.folksamblogg.se) since 2009. This blog continued in 2013 and was also supplement- ed by a twitter account, @etikkatten, where the latest updates are regularly published. 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 32
  33. 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. “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 infu- riated.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 compa- nies 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 ma- jority 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 sustain- ability perspective.Afew have even realised that there is potential to increase their sales and thereby their profits.” 33
  34. 34. Apioneerinsustainability 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 consid- erable opportunities to exert an influence and our high environmental requirements have contributed to a better environmental standard at several large subcontractors. Both our auto and building damage operations are envi- ronmentally certified under ISO 14001. 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 26000 in 2013, a guiding standard in social responsibility. In 2013... … 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 CO2 e in 2013.The foremost emis- sion 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 cli- mate 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 sustaina- bility report. For several years, we have climate compensated the climatefootprintfromouroperationsandourproperty portfolio through theViAgro-Forestry Programme tree-planting project.ViAgro 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. 2013 2012 2011 Road travel 765 873 800 Air travel 1,092 1,092 940 Train travel 2 2 0.003 Heat 765 348* 371* Electrical system 6 7 7 Printed matter 57 74 64 Paper 82 78 65 Coffee 21** 13 14 Water*** 2 2 Not included Total tonnes CO2 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. 34
  35. 35. 35 Clear guidelines for business travel Our travel policy provides all employees with clear guide- lines 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 Stock- holm-Gothenburg, for environmental reasons. Fewer offices results in lower electricity con- sumption All electricity purchased for Folksam’s and KPAPension’s head office, the offices throughout Sweden and Folksam’s subsidiary Förenade Liv’s office premises is ecolabelled with the Good Environmental Choice ecolabel. Electric- ity consumption, and thereby the climatic impact, from the offices decreased in 2013 by approximately 11 per cent compared with 2012.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 CO2 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 re- pairing 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 environ- mental 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 employ- ees 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 infor- mation 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 environ- mental impact. Read more about our environmental efforts in the Folksam Sustainability Report.
  36. 36. Karin Stenmar Environmental and Climate Manager at Folksam 36
  37. 37. 37 The environmental and climate issue permeates all we do in Folksam. “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 insur- ance 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 re- quirements 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 ap- plies 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 macrop- erspective, but we also need to talk about the issue from a microperspective. It is in daily life that we all can have an influence.
  38. 38. 38 World-famous trafficresearch The knowledge Folksam’s traffic research provides is used to save lives in traffic. Fewer traffic injuries also means lower injury costs and thus lower traffic insurance premiums, which benefits our customers. We use our research findings to exert influence in making traffic safer.Through our ties to universities, we can be involved and exert influence through national and inter- national networks. Consumer tests and information are also important tools since there is a demand for knowledge from independent parties regarding, for example, safe cars, child car seats and helmets in connection with purchases. We can also exert influence through our own insurance solutions where, for instance, the safest cars have reduced premiums. Our traffic research focuses on: • safer cars • bicycling • motorcycles • speed limit compliance The traffic research costs approximately SEK 7-8 per vehicle insurance policy and year. Några av våra trafiksäkerhets- aktiviteter under 2013 Volvo superior in our ranking of safe cars “How safe is the car?” is Folksam’s ranking of the crash safety of cars and is based on the outcome of real ac- cidents.The highest rating in this year’s report went to Volvo’s modelsV70, XC70, S80, S60 andV60 from 2007 and forward.Their safety level is nearly 60 per cent higher than the average car and 12 percentage points better than number two on the list, Honda CRV98-06. Every year, we handle more than 50,000 road traffic claims.This gives us access to a large collective knowledge about how damage and injuries arise, how they can be avoided or limited.The make and model of car you are travelling in is very significant for the consequences of an accident. Top list Per cent better than the average Volvo V70/S80/S60/V60 07- 59 Honda CRV 98-06 47 Volvo V70/S80/S60 00-06 46 BMW 5-series 04-09 44 Audi A4 01-07 43 Mitsubishi Galant 97-03 42 VW Passat/CC 08- 42 Volvo XC90 02- 42 In this year’s report, we ranked 238 car models. New agreement with OKQ8 and Hertz Upon damage, many of our auto insurance customers get a rental car while their own car is in the workshop.We then ensure that the customers get sustainable cars by setting requirements on what safety and environmental standards the rental cars shall have. However, the greatest effect is on the used car market. Since the rental car companies most often replace their car fleet after 9-10 months, we are involved in influencing the standard of the cars in the second-hand market.The criteria are based on Folksam’s annual list over safe and sustainable cars. Whiplash protection most effective for men We carried out the first study in the world that shows how effective whiplash protection in cars is for men and women, respectively.The results show large differences in the pro- tective effect between the genders.The whiplash protection in one out of five cars has little or no protective effect for women, while the same protection functions well for men. One cause of the difference is that car makers for many years have worked based on the physiology of men in the development of whiplash protection. 60 per cent fewer skull injuries with bicycle helmets Our study shows that bicycle helmets prevent 60 per cent of all bicycle-related head injuries that lead to chronic difficulties. Nearly four out of ten serious face injuries can also be prevented.
  39. 39. 39 The study is based on just over 55,000 injuries reported by the emergency hospitals in Sweden between 2003-2012.The results were presented at the international scientific traffic safety conference IRCOBI in Gothenburg. 12 of 13 approved child bicycle helmets do not protect against the most common head injuries We presented a bicycle helmet test for child helmets just before the summer. Blows where the head is subjected to rotation are the most common kind of violence in a bicycle accident and can lead to brain injury. In spite of this the Swedish ConsumerAgency’s certification tests of bicycle helmets do not include blows with rotation. Folksam’s more stringent test of the most common bicycle helmets for children and adolescents shows that only one of the 13 CE-approved helmets protect against injuries as a result of blows with rotation. ABS brakes crucial to motorcyclist safety One of our studies shows that motorcyclists that ride with ABS brakes run a full 65 per cent lower risk of suffering injuries that lead to medical disability than motorcyclists who ride withoutABS. Of the approximately 300,000 motorcycles on Sweden’s roads, only around 18 per cent are equipped withABS brakes. But there is a positive trend. Between 2008 and 2012, new sales of motorcycles withABS increased from 15 per cent to 70 per cent. From 2016,ABS brakes are compul- sory on all new motorcycles over 125 cc. If all motorcycles hadABS, 13 deaths and 160 severe accidents could have been avoided every year. Motorcycles equipped withABS receive a 15 per cent premium reduction with us. Automatic brakes difficult for car buyers to choose Automatic emergency brakes are one of the car’s most im- portant protective systems. However, although the system is just as effective as anti-lock brakes and airbags, there are very few car makers who offer it as standard equipment. Moreover, there are several different kinds of automatic brakes and it is difficult for the consumer to find out how the various systems work. Earlier studies have mainly shown the accident-avoidan- ce effect of automatic brakes. Our new study shows that the damage-reducing effect is even higher due to the reduced crash violence in the crashes that nonetheless occur.Auto- matic brakes that engage upon rear-end collisions on roads with a speed limit up to 50 km/h reduce the drivers’ injuries in the car hit by a full 64 per cent. In about 40 per cent of cases, a collision still occurred, but without causing any in- juries. In addition, around 25 per cent of the accidents are estimated to have been avoided entirely. Cars with automa- tic brakes as a standard receive a premium reduction. Studded or non-studded winter tyres? Before every winter season, voices are heard discussing what is best, studded or non-studded tyres.We therefore re- viewed test data for 44 studded, 31 Nordic non-studded and 11 Central European winter tyres to investigate what type of tyre works best in the winter in various parts of Sweden. The review assumed that there is a connection between braking distance and accident risk. Our review shows that Nordic non-studded winter tyres are best adapted to the winter climate in southern and cen- tral Sweden.Although the braking distance is somewhat shorter with absolutely new studded tyres, it is most often bare ground in these parts of Sweden so that the studs are worn down and approach non-studded tyres after just a few years. We can make a difference and help the customers By analysing the injuries and damage that occur, we can provide advice on the best products and how one can pre- vent accidents and injuries.Another way is to integrate this knowledge into the insurance.Another example is that we have lower premiums for more environmentally sustaina- ble cars and motorcycles withABS brakes.Yet another is that our home and auto insurance has the Good Environ- mental Choice ecolabel. Motorcycles are an interesting area of research with large challenges. But our largest impact is within car and bicycle accidents where the most injuries are. Matteo beginning with research was not a deliberate choice, but rather a desire to improve things. His interest in everything on wheels led him to the traffic field. His own interest in motorcycles has gone from riding as fast as possible to taking in the surroundings he passes. Matteo Rizzi Traffic safety researcher in Folksam Background: Mechanical engineer and doctoral student in engineering science. Began riding a moped at the age of 14 and is a passionate collector of motorcycles.
  40. 40. 40 Folksam has a long history as an insurance provider and partner for Swedish sports. Through cooperation with most of the sports federations, nine out of ten active sports practitioners are insured with us. Besides being an insur- ance provider, we support sports through sponsorship and injury-prevention research. Our hearts beat for sports! Through the Swedish Sports Confed- eration’s basic research, all leaders and functionaries in 20,000 associations and 70 special confederations are insured with us. In addition, 53 of the 70 special associations have signed a licence or membership-linked accident insurance for the athletes.With 1.6 million practitioners insured, we have a total market share of just over 90 per cent.We are also an insurance provider within the elite division collectively agreed pension and insure just over 3,000 sports associations’ property. Major cooperation agreements • The Swedish Sports Confede- ration’s basic research for all leaders and functionaries. • The Swedish Football Association’s licence insurance for 330,000 licensed players and 350,000 young people. • The Swedish Golf Federation’s member insurance with 500,000 members. • The Swedish Floorball Federation’s licence insurance for 120,000 licensed players. Elite and exercise sports with a broad base Sponsorship is an important part of being the insurance company of sports. The objective of sponsorship is to build the brand by supporting both elite and exercise sports and creating and strengthening long-term relationships with Swedish sports.When we go in as a sponsor or partner, the sports shall have a broad support base and engage people regardless of age, gender, origin or social class.Through agreements with the associations, we primarily cooperate with football, track field, sports for the disabled and cross-coun- try skiing. Injury-prevention research Aunique database of 16,000 registered sports injuries provides an opportunity for research and injury prevention efforts. Focus in 2013 has been on the knee control project, sudden death among young athletes and support for a doctoral candidate position in cooperation with the Swedish School of Sport and Health Sciences (GIH). I am incredibly proud of the knee control ini- tiative and that our app has been downloaded more than 50,000 times. The knee control project is a concrete effort to prevent knee injuries for a new generation of girl footballers. Lars-Inge Svensson Director, Folksam Sports Background: Has had the benefit of working with the Swedish sports movement since the 1980s and as the Director of Folksam Sports since 2007. Weinsurenineout oftenathletes
  41. 41. Knee control Knee injuries are common in football and teenage girls are especially affected. The knee control project is an initiative by the Swedish Football Association and Folksam that began as early as 2008. The objective is to train football coaches, leaders, parents and players on how to exercise to prevent knee injuries among girl players aged 12 and up. A sim- ple exercise programme of 10-15 minutes sharply reduces the risk of serious knee injuries among girl football players. Since 2013, the exercises have been gathered in the app, Knäkontroll (knee control). There are more than 30 filmed exercises with clear instruc- tions, infor- mation on the knee control study and news linked to exercise and sports injuries. 41
  42. 42. 42 Attractive employer As Sweden’s largest insurance company with several subsidiaries, Folksam can offer many interesting career opportunities in several businesses. Many employees also appreciate working in a responsible company that has the financial strength to make a difference. Folksam has just over 3,600 employees in several cities and multiple compa- nies.They work with everything from claims adjustment and advice to IT, legal affairs and risk assessment.The right skills and long-term sustainable employees are a prerequisite for being able to offer insurance and pension savings that provide security. Every employee is an important investment Every employee is a major and key investment - both for Folksam and the applicant. Managers are therefore trained to take a long-term view of Folksam’s supply of expertise and to always recruit and develop the employ- ees in consideration of the next phase of development. In 2013, 529 employees were recruit- ed externally. Nearly as many switched jobs internally, either after having ap- plied for a new job on their own or due to a reorganisation.The largest part of the recruitment is in sales, claims adjustment and IT. In 2013, the procedures and support in the staffing process were updated, in part to meet future requirements in the EU Solvency II directive - special aptitude testing of management and key individuals. Support during organisation changes The work of recent years on changing the organisation in sales and claims - how we personally treat the customers - continued.The change work has been based on the customers’ wishes, market conditions and our need to be competi- tive even in the future.The change has entailed major internal relocations for employees in different cities in Sweden and a cooperation forum worked to find the best possible solutions for the employees involved. For those thinking about the next career move, there is the possibility of career planning with an external coach. In September 2012, Folksam announced the acquisition of the insurance company, SalusAnsvar, and in September 2013, around 130 new employees moved over to various parts of Folksam. In conjunction with the transition, the employees received a special introduction day and career talks tied to the receiving units. Om oss Number of employees 3,641 Employee turnover 9.8% Average age, total 44.8 years Sickness absence 4.2% Gender distribution, total 53% women 47% men Gender distribution, managers 47% women 53% men Gender distribution in the boards 50% women 50% men Gender distribution in Group management 45% women 55% men
  43. 43. 43 Safe and stimulating working environment We shall have a work environment that promotes good health, motivation and productivity.This means a workplace where the employees feel secure and have stimulating work and where consideration is taken to physical and psychosocial needs. Achange project that concerns the office workstations is under way.The project is focused on activity-based workplaces and the objective is to obtain a more efficient work organi- sation and more learning and to lower premises costs.We also encourage virtual meetings over the computer, which has a positive impact on both the environment and finances. Efforts to reduce sickness The SwedishWork Environment Authority conducted six work environ- ment inspections in Folksam in 2012 and 2013.The results show that we have well conceived processes for the work environment efforts and the Swedish Work EnvironmentAuthority only had a few minor remarks that have now been resolved. Sickness absence was 4.2 per cent in 2013.This was an increase that was seen in both Folksam and the rest of Sweden and it was probably due to several factors.To turn the developme- nt, analyses are conducted and action plans prepared for groups with high sickness figures. Diversity and equality We believe that diversity contributes to customer benefit, greater profitability and a more attractive workplace. Con- sequently, we work goal-oriented for an inclusive cooperation climate where the employees’ expertise is utilised and there is acceptance for differences. Through a clear and expertise-based staffing process, diversity is support- ed and the risk of discrimination is minimised. The fact that Folksam currently has nearly 50 per cent women managers is an example of results of goal-oriented diversity work. In 2013, a revised diver- sity plan was prepared and the desire is that the diversity issues shall be even more integrated into the workday. Market-based salaries In the review by the Equality Ombuds- man, Folksam’s work on equal wages received good marks. In a comparison of the average salary between male and female employees with similar jobs, the salary difference was approximately 4 per cent in 2013.To obtain fully equal salaries, Folksam surveys and anal- yses potentially non-objective salary differences in salary reviews every year, instead of just doing a survey once every three years as required by law. The salary is set individually, is differ- entiated and shall be based on degree of difficulty and responsibility in the position and the employee’s expertise, experience and performance. For parental leave, Folksam provides a salary surplus so that the employees receive 90 per cent of the monthly salary regardless of income in the first 210 days. Annual employee survey In this year’s employee survey, the total index ended at 76* per cent. This is 4 per cent higher than the year before and the best total index measured in Folksam. * Proportion of employees who responded in agreement to the question or market the rating 4 or 5 on a five-degree scale. We have a good atmosphere where I work and you feel that your voice is heard. In contrast to when I worked at a bank, I think that it is easier to justify one’s stance in that we are customer owned. Mårten mainly works with fund insurance and his duties include analysing profitability and creating models to describe how the business will develop. Mårten Marcus works as an actuary in Folksam Background: Master of Science in Engineering Physics. Two years as an industrial doctoral student in finance with contact in the bank world.
  44. 44. 44 Assetmanagement Folksam is one of Sweden’s ten largest investors and manages assets of SEK 304 billion. The customer’s money is invested in interest-bearing securities, equities, properties and alternative investments focused on long-term security. Two thirds of all capital is invested in interest-bearing securities issued by the Swedish government, Swedish municipalities, Swedish mortgage institutes or Swedish companies. Folksam’s equities portfolios consist of listed Swedish and non-Swedish equities.At the end of the year, Folksam owned property assets, including property funds, totalling SEK 20 billion.The overwhelming majority of directly owned properties are located in Sweden and their market value totals SEK 16.2 billion.The value of the alter- native investments was SEK 5 billion at year-end.Alterna- tive investments are investments that have a low correlation with equity and interest rate markets. Eleven companies with various investment emphases Folksam consists of 11 insurance companies, all with dif- ferent profiles and emphases. Consequently, the Board of Directors of each company establishes individual objec- tives and levels of risk for the asset management, establish- ing the limits within which the capital may be invested. The greatest risk for an insurance company is in the long run to not be able to cover its obligations towards policy- holders.To manage this risk, special consideration is given to the nature and duration of the insurance commitments in he composition of the investment assets. Special rules apply to the asset management, mainly the placement regulations of the Insurance BusinessAct. In addition, we comply with the Financial SupervisoryAu- thority´s regulations and general guidelines as well as each company’s rules for environmental and ethical consider- ations.The risk level of each company’s asset portfolio is monitored on an ongoing basis. It must be highly likely that the statutory requirements for each portfolio are able to be met and the risk level may not be so high as to endanger this, even during a very negative trend on the financial and insurance markets. Folksam total, SEK billion 2013 2012 2011 2010 2009 Assets under management 304,299 275,380 252,653 235,070 215,005 of which interest bearing 189,721 184,329 174,906 148,621 137,242 of which equities 89,779 68,670 58,664 70,086 63,579 of which alternative investments 5,050 3,754 3,183 2,010 1,887 of which directly and indirectly owned property 19,749 18,627 15,900 14,353 12,297 Focus on stable returns Folksam General SEK 32.1 billion Folksam Life SEK 135.0 billion KPA Pension SEK 101.6 billion Coop Pension Foundation SEK 22.6 billion Other SEK 13.0 billion Managed assets by company
  45. 45. Management Mandates Folksam’s asset management determines how assets are invested within the limits decided on by the boards. In order to achieve good risk diversification, the holdings are distributed between a wide variety of asset classes and mar- kets. Certain types of investments are managed internally, while others are managed externally. Positions managed internally are primarily conducted through derivatives to tailor each company’s level of risk.This may, for instance, involve stock options that decrease or increase the effects of fluctuations on the stock exchange. Interest derivatives are used, for example, to hedge disbursements of guaran- teed benefits to life insurance policyholders. Management mandates are currently given to the internal functions of Folksam Fastigheter andAlternative investments, and externally to Swedbank Robur,Aktia Asset Management and DNB.The most extensive external management assignment is the one to Swedbank Robur and comprises approximately SEK 240 billion. Swedbank Robur also manages the majority of the continuous ad- ministration of transactions and securities holdings.The role of Folksam asset management is to be responsible for governance, monitoring and evaluation. Folksam Fastigheter By owning the right properties, we create good returns in the management of our customers’ assets.The directly owned properties are managed by Folksam Fastigheter. We build, manage, let and develop these properties.With residential properties, nursing homes, offices and shops in attractive locations, we can also offer secure housing and attractive workplaces. Alternative investments Alternative investments refer to an internal management mandate with a long investment horizon which aims to give policyholders access to unlisted assets. Investments must show a low correlation with the interest rate and equity markets and are made mainly in fund-like structures. Alternative investments, SEK million Hedge funds 288 Private Equity/Credit funds 1,026 Infrastructure/Energy 1,380 Other 2,356 Total 5,050 Folksam Fastigheter Number of properties 130 Market value SEK 16,249 million Total rentable area 549,883 m2 Rental income SEK 1,058 million 45
  46. 46. 46 Strategic company holdings Corporate strategic investments are investments of particular strategic importance to each principal and are characterised by the fact that it is the Boards who decide on purchases or disposals. One important strategic holding is Swedbank, where Folksam owns just over 9 per cent of the shares.At the end of the year, the value of the shares in Swedbank was nearly SEK 19 billion. Total return ratio The objective of investment management varies between the different companies. For Folksam Life and KPA PensionsförsäkringAB, the objective is to achieve the highest level of real return under relevant risk and invest- ment limits, while in Folksam General and the rest of the companies, it is to contribute to stable and competitive premiums. For the life business, the objective should mean at the very least, an annual real rate of return of three per cent on average, measured over a ten-year period. Folksam has, for a number of years and in different market condi- tions, proved to be able to manage the risks and opportuni- ties in asset management in order to create long-term good returns for policyholders.The total return for 2013 was 7.7 per cent for Folksam General, 7.6 per cent for Folksam Life and 8.2 per cent for KPAPensionsförsäkringAB. Total return ratio In per cent 2013 2012 2011 2010 2009 Folksam General 7.7% 8.2% 6.9% 6.7% 8.1% Folksam Life 7.6% 7.0% 6.5% 8.7% 10.3% KPA Pension 8.2% 7.2% 5.6% 8.2% 12.4%
  47. 47. 47 Riskmanagement –ankeypartofthebusiness A fundamental part of our business is assessing and managing risks. Through active, controlled and business-based decisions on risks, we create conditions for offering the customers insurance and savings solutions that create security. In order to clarify management and responsibility for risk management and control, we divide activities into three lines of responsibility. Three lines of responsibility The first line of responsibility is made up of business areas and units, parent companies and subsidiaries and outsourced business.They are responsible for directing operations so that the targets established by the board are achieved.They are responsible for risk management activi- ties, monitoring and compliance. The second line of responsibility comprises Risk and compliance departments, and the chief group actuaries. They support and follow up the first line of responsibility on the basis of frameworks for risk management, and are responsible for having an overall picture of the risk situation in the company and report this to the board and the CEO. The third line of responsibility consists of internal audit, which reviews and evaluates internal management and control on behalf of the Board. Risk management in Folksam We assess risk taking in relation to the possibility of achieving set targets in five steps. 1. Identification In the first step, we identify and disentangle all signifi- cant risks we are exposed to both on the short and long terms. 2. Evaluation Risks are evaluated in a uniform manner and quantified using generally accepted methods. 3. Management Here, we use regulations, processes and control ac- tivities.The business and corporate management are responsible for prioritising and deciding on measures necessary to control or limit risk. 4. Follow up The business and control functions follow up on risks and measures and ensure that the risks lie within decid- ed levels. 5. Reporting The board and CEO receive an all-round and factual view of the total risk situation.
  48. 48. Ylva Wessén Manager of Risk Compliance in the Folksam General Group 48
  49. 49. 49 Control is about responsibility toourcustomersandemployees. Risk and Compliance is responsible for following up that Folksam has good internal control - that the company has control of risks and complies with laws, internal regulations and generally accepted practice. “There are higher demands on governance and control for businesses that require permits, which we are,” saysYlva Wessén, Manager of Risk and Compliance in the Folksam General Group. “Of course, it is ultimately about main- taining our permit, but we are also convinced that good control leads to a better and more commercial business.” We insure half of Sweden’s population and manage their pensions. To follow up on shortcomings, all employees must report incidents that arise. Examples of incidents are thefts, fire, threats, technical and manual faults, computer virus- es, personal injuries, near accidents and improprieties. Incidents also include the cases when regulations are not followed.An example is Folksam’s ethical rules, one of our most important regulatory codes.They are about how we should be perceived and how we want to be - we are an insurance company that cares about our customers, we are personable, committed and responsible. “We most often follow ethical rules without thinking about them - they are givens in many cases and common sense will get you far,” saysYlva. Just like we do not behave how- ever or impolitely in society in general, we shall not do so in our professional role. We receive around 500 incident reports a year, which is too little, according toYlva. It should be more, considering the number of employees, the matters we handle and the kind of business we have. “Our attitude is that the more incidents that are report- ed, the better.You can do something about an issue only when you are aware of it.”
  50. 50. 50 Newrulescontrol development Insurance is an important part of society’s safety net. Demands on the insurance industry from both private customers and politicians are growing in pace with major changes in our surroundings. The major increase in new regulations from the EU and the Swedish govern- ment provides a clear illustration of a political need to create more control. Requirements of greater transparency and comparability for the consumers is one example. At the same time, the financial players must increase liquidity with the aim of making the systems more stable. Solvency II is a European regulatory code for insurance companies. It is a part of a larger effort to create a uniform European financial market with greater protection for in- surance policyholders and improved competitiveness.The new rules in Solvency II strengthen the connection between solvency requirements and risks for insurance companies, and entail more stringent requirements on insurance com- panies having adequate capital to be able to live up to their commitments to the policyholders.Through greater risk control, the companies will be governed in a more sound and suitable manner. Solvency II provides greater protection to the policyholders We began adapting to Solvency II as early as 2009.We have mainly focused on coordinating the adaptation of processes and system support we use for corporate govern- ance and reporting. Solvency II is an important part of the modernisation of Folksam and the rest of the industry, a development that is good for both the customers and for us as an insurance company. The European Insurance and Occupational Pensions Authority (EIOPA) decided in autumn 2013 on preparatory guidelines for the Solvency II regulations.The Swedish Financial SupervisoryAuthority has decided that Swedish insurance companies shall comply with EIOPA’s guide- lines during the preparatory period 1 January 2014 until 1 January 2016 when Solvency II enters into effect.We have therefore increase focus on getting ready with our methods and processes for both corporate governance and reporting.
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  52. 52. 52 Fourbrands,twoGroupsand11 insurancecompanies Folksam comprises the two parent companies Folksam ömsesidig sakförsäkring (Folksam General) and Folksam ömsesidig livförsäkring (Folksam Life) with subsidiaries. Two of the sub- sidiaries in the insurance operations in Folksam Life are part-owned. These are Folksam LO Fondförsäkring, which is 51 per cent owned, and KPA Pension, which is 60 per cent owned. In Folksam General, the subsidiary Folksam Skadeförsäkring is part-owned at 51 per cent. Of thegroupcompanies,FörenadeLivGruppförsäkring (FörenadeLiv)andtheinsurancecompaniesinKPA Pensionarenotconsolidatedintheconsolidatedaccounts inFolksamGeneralandFolksamLife,respectively.The reasonisthatthesecompaniesarenotdividend-payingand thereforeallsurplusinthecompaniesgoestothepolicyhold- ers.Toachieveeconomiesof scale,thecompaniescollabo- rateondistribution,administrationandassetmanagement. Folksam General Folksam General is customer-owned and undertakes gen- eral insurance activity principally focused on the Swedish household market.The company offers a full range of insurance policies to households and private individuals based on motor and household insurance supplemented by commercial insurance in selected areas. Förenade Liv offers group insurance for life, health, accident, medical care and child and pregnancy insurance to employees and members through the employers and organisations that represent them.At the end of 2012, Folksam General acquired Förenade Liv from Folksam Life mainly to strengthen the market position in risk insurance. Folksam General acquired SalusAnsvar AB at 31 January 2013.The company in turn owns 49 per cent of Saco SalusAnsvar FörsäkringsAB and 100 per cent of SalusAnsvar PersonförsäkringAB. SalusAnsvar provid- ed insurance to Svenska Konsumentförsäkringar, a wholly owned subsidiary of Folksam General. In January 2014, the portfolio in Svenska Konsumentförsäkringar was transferred to the Parent Company Folksam General and the company will be discontinued. At the beginning of 2012, Folksam General acquired 51 per cent of the shares in Folksam Skadeförsäkring (formerlyAktia) fromAktiaAbp in Finland. Folksam Ska- deförsäkring conducts non-life insurance operations and is primarily active in the coastal area of Finland. Tre Kronor offers non-life insurance in Sweden. Its business concept is to offer non-life insurance to compa- nies and organisations wishing to sell and market insur- ance under their own brand names.Tre Kronor currently collaborates with Swedbank and 59 independent savings banks and in so doing reaches a broad market with general insurance products. Folksam Life Folksam Life is customer-owned and conducts life insur- ance business.The company offers occupational pensions and pension investments to private individuals, directly or through cooperation, but also group life insurance and other types of risk insurance. Folksam Fondförsäkring conducts unit-linked insur- ance operations with ties to mutual funds. Customers can choose among a large number of selected funds, for exam- ple ethical funds, funds with low charges and award-win- ning top-performing funds. KPA Pension is a brand and joint name for KPAPen- sionsförsäkring, KPALivförsäkring and KPAPensions- service. KPAPension is the leading pension company in the municipal sector and manages occupational pensions for employees of municipalities, county councils and municipal and cooperative companies. KPAPensionsser- vice offers employer service for the handling of municipal pension commitments, administration of the employees’ individual pension choices and qualified consulting ser- vices, occupational group life insurance and professional pension advice. KPAPension offers private individuals investments in private pension insurance and unit-linked insurance. KPAPension is owned 60 per cent by the Folk- sam Group and 40 per cent by the SwedishAssociation of LocalAuthorities and Regions (SALAR). In 2013, KPA Pension acquired SPPLiv PensiontjänstAB. Folksam LO Pension is a brand focused on collective- ly agreed occupational pensions and principally covers administration and management of pension allocations made under the pensions agreement between the Con- federation of Swedish Enterprise and the SwedishTrade Union Confederation (LO). Operations are conducted in Folksam LO Fondförsäkring, which is owned by Folksam Life with 51 per cent and LO and several of their associa- tions with 49 per cent.
  53. 53. 53 FolksamGeneral Svenska Konsument- försäkringar Tre KronorFörenade Liv SalusAnsvar Folksam Non-life insurance 51% FolksamLife Svenska Lärarfonder Folksam Fondförsäkring Folksam LO Pension 51% KPA Livförsäkring KPA Pensionsförsäkring KPA Pensionsservice KPA Pension 60%
  54. 54. 54 FolksamGeneral Folksam General conducts property and casualty insurance business focused chiefly on the Swedish market. The company offers a full range of insurance policies to households and private individuals based on motor and household insurance supplemented by commercial insurance in selected areas. The operating activities are carried out within two business segments, Partners and Private. Earnings and the market Earned premiums and market shares The premium income (after reinsurance) in the Group increased by 7 per cent to SEK 10,974 million (10,287) and in the parent company to SEK 8,800 million (8,340).The premiums are increasing in all product areas as a result of premium adjustments, more insurance policies taken out and increased customer loyalty with fewer annulments. The portfolio development is positive in both auto and home. Folksam General continued to focus on existing custom- ers and developing the relationships with their cooperative partners. Household insurance is the most strategically important product and comprises the core of the whole insurance offering. Folksam General was the company that increased its market shares most in the Swedish non-life insurance mar- ket in the period 1 January-31 December 2013, compared with the year-before period.According to statistics from the Swedish Insurance Federation, Folksam General’s market share, measured in premiums paid in, increased to 15.9 per cent (15.4).The market share in the household market for the Folksam General Group amounted to 20.3 per cent (19.9). Market shares measured by the number of policies to- talled 48.8 per cent (48.8) for home contents insurance, 28.3 per cent (28.1) in single-family homeowner’s insurance and 21.4 per cent (21.6) for private car insurance. Earnings Consolidated earnings before appropriations and tax amounted to SEK 2,019 million (2,031) and SEK 2,056 million (1,874) for the parent company.The earnings for the insurance business are on a par with the previous year.The return on assets contributed just as strongly to the positive earnings in previous years. Claims incurred (after reinsurance) increased during 2013 and amounted to SEK -8,984 million (-8,488) for the Group and SEK -7,188 million (-6,919) for the parent company. In 2013, the setting of reserves was revised with larger provisions as a result.The annuity reserves for traffic claims decreased at the same time as a result of a rising discount rate. The total cost ratio in the Group and mother compa- ny decreased by two percentage points to 100 (102).The claims cost ratio amounted to 82 per cent (83) in the Group and the parent company. The operating expense ratio in the Group and parent company decreased to 18 per cent (19). Operating expenses increased by SEK 25 million during the year. Claims ad- justment costs are increasing as a result of rising volumes, project costs and a reinforcement of the organisation. Financial position Consolidation capital in the parent company continued to strengthen and amounted to SEK 13,526 million (11,616). At year-end 2013, the solvency ratio amounted to 149 per cent (139) in the parent company and the solvency factor amounted to 8.1 (7.5). Folksam General’s bonus programme continues and for 2013, SEK 278 million was reserved. Disbursements will take place in 2014 and the bonus comprises a total of 1,750,000 customers.
  55. 55. 55 Significant events during the financial year The boards of Folksam Life and Folksam General ap- pointed Jens Henriksson as the new President and CEO on 7 May. He succeededAnders Sundström who had previ- ously notified that he would be resigning to pursue board work. Jens Henriksson began on 1 September 2013 and most recently came from a position as the CEO of Nasdaq OMX Stockholm. In May 2013, it was decided that a consortium consisting of Folksam, Metso Corporation, NorrskenetAB and Peab AB would each invest USD 25 million for a total of USD 100 million in bonds issued by Northland ResourcesAB. Folksam’s investment is divided across Folksam ömsesi- dig livförsäkring (Folksam Life) and Folksam ömsesidig sakförsäkring (Folksam General). Folksam General has a strong financial position and provides a bonus to the customers for the second consecu- tive year.Approximately SEK 278 million will be paid out to the customers. On 31 January, Folksam General became the owner of SalusAnsvarAB with the subsidiaries SalusAnsvar Per- sonförsäkringAB and a 49% holding in Saco SalusAnsvar FörsäkringsAB.The integration of both expertise and the insurance portfolio from SalusAnsvar has been successful. Several large partner customers, especially Saco associa- tions, are now a part of Folksam’s offering.Agreements on an expanded holding of 2 per cent have later been signed with the Saco associations concerning SACO SalusAnsvar FörsäkringsAB. Folksam General has signed an agreement on the acquisition of HSB’s property insurance portfolio.The acquisition comprises the roughly 500 tenant owners asso- ciations that are currently insured with HSB Försäkring. The premium volume for the assumed portfolio amounts to approximately SEK 25 million per year. After an agreement with the Swedish FootballAssocia- tion, Folksam General invested in a jointly owned compa- ny that owns 11.1 per cent of FriendsArena in Solna.The agreement between Folksam and the Swedish Football Association covers the company that owns the actual prop- erty, FriendsArena, and not the operating company that rents and is responsible for the events. Future developments After the strong earnings of recent years, Folksam General has a very strong financial position and with customer ownership in focus has paid bonus to the customers since 2013. In the next few years, Folksam General is entering a phase of consolidation with a focus on efficiency enhance- ments and modernisation with its financial strength as a basis.The acquisition of SalusAnsvar has strengthened the Folksam brand through new partner relationships with several Saco associations and the integration project means that the company structure will be streamlined in the next few years.The customers in the current Svenska KonsumentförsäkringarAB and SalusAnsvar Person- försäkringAB are offered non-life insurance in Folksam General, which entails a higher volume in the parent company as of 2014. The market share in the household market continues to increase and focus remains on the combination customer offer with auto and home insurance as a base. Customer loyalty is increasing with more insurance policies including supplemental insurance, combination customer discounts and bonuses. Astrategy review is being begun in 2014 to further strengthen Folksam General at the same time as a distinct improvement initiative for the operating activities. Claims expenses and pricing remain important areas of develop- ment and the steps taken in the terms review, reserve setting and purchasing are expected to contribute positively to strengthening the insurance result.The investment margin for the operating activities is being expanded to increase customer satisfaction and availability, mitigate operating deficiencies and enhance the efficiency of processes and ITsystem, which is expected to increase the operating expenses in the next few years to improve earnings after a few years. Like the rest of the industry, Folksam will participate in the work preparing for Solvency II with an introduction date of 1 January 2016.The preparation work comprises Folksam’s own risk and solvency capital assessment, re- porting and corporate governance. On the longer term, the new regulations entail greater security for the customers and greater consideration of the cost of capital adequacy requirements in both customer offers and investments. The return for the investment portfolio has in recent years strongly contributed to the now strong balance sheet, which provides good conditions for Folksam General to meet the new capital adequacy requirements placed on insurance companies. On the longer term, the insurance results were strengthened to balance the market risk in the investment portfolio.
  56. 56. 56 Five-year summary and key ratios, SEK million GROUP 2013 2012 20111 2010 20092 Earnings Premiums written (after reinsurance) 11,265 10,223 9,697 9,125 8,552 Premiums earned (after reinsurance) 10,974 10,287 9,362 8,822 8,579 Return on capital net in insurance operations 470 524 641 643 626 Other technical income (after reinsurance) 31 30 26 30 107 Claims incurred, net -8,984 -8,488 -7,983 -7,265 -6,747 Operating expenses in insurance operations -2,010 -1,912 -1,734 -1,575 -1,608 Bonuses and rebates, net -290 -232 -9 -1 6 Other technical expenses (after reinsurance) – – – -38 -1 Insurance operation technical result 191 209 303 616 962 Remaining return on capital 1,981 1,825 1,457 1,074 1279 Other -153 -2 -11 23 13 Profit/loss before appropriations and income tax 2,019 2,032 1,749 1,713 2,254 Financial position Investment assets at fair value 34,731 32,593 29,225 25,664 24,804 Technical provisions, (after reinsurance) 26,434 25,673 23,456 21,874 20,769 Solvency capital Taxed equity 11,048 8,891 7,717 6,866 5,446 Subordinated liabilities - - - - 1,475 Deferred tax liability 3,047 2,485 2,462 2,255 1,745 Surplus value in investment assets Investments in Group companies and associated companies 154 204 179 146 216 Other financial investment assets - - - - - Total surplus value 154 204 179 146 216 Total solvency capital 14,250 11,580 10,358 9,267 8,882 Key ratios Earnings from PC insurance business Claims ratio 82 83 85 82 79 Expense ratio 18 19 19 18 19 Combined ratio 100 102 104 100 97 Earnings from asset management Yield, per cent 3 2.9 3.1 3.5 2.2 2.7 Total return, per cent 7.6 8.2 6.9 6.8 8.2 Financial position Solvency ratio, per cent 126 113 107 102 104 1 Restated owing to change-over to full IFRS in consolidated financial state- ments and for provisions for pensions and similar liabilities. Earlier years are not recalculated in respect of this change of principle. 2 Restated owing to changed valuation principles for technical provisions not classified as occupational pension policies. 3 Yield has been restated for 2009 ac- cording to the change regulations FFFS 2009:12. . Special accounts for applied ac- counting and valuation principles are provided in connection with annual report notes.
  57. 57. 57 Five-year summary and key ratios, SEK million PARENT COMPANY 2013 2012 1 2011 2010 2 2009 Earnings Premiums written (after reinsurance) 9,061 8,332 8,292 7,989 7,607 Premiums earned (after reinsurance) 8,800 8,340 8,068 7,789 7,704 Return on capital net in insurance operations 427 479 608 613 595 Other technical income (after reinsurance) 30 31 25 30 75 Claims incurred, net -7,188 -6,919 -6,909 -6,354 -6,103 Operating expenses in insurance operations -1,631 -1,606 -1,472 -1,322 -1,378 Bonuses and rebates, net -290 -231 -9 -1 6 Other technical expenses (after reinsurance) – – – – -1 Insurance operation technical result 148 94 311 755 898 Remaining return on capital 1,914 1,781 1,079 999 1,301 Other -6 -1 -9 -3 -3 Profit/loss before appropriations and income tax 2,056 1,874 1,381 1,751 2,196 Financial position Investment assets at fair value 33,755 31,073 28,164 25,032 24,058 Technical provisions, (after reinsurance) 23,269 22,763 21,719 20,302 19,422 Solvency capital Taxed equity 4,022 3,025 2,189 2,131 1,920 Untaxed reserves 8,350 7,623 7,142 5,998 5,189 Subordinated liabilities – – – – 975 Deferred tax liability 999 764 562 546 315 Surplus value in investment assets Investments in Group companies and associated companies 154 202 179 146 216 Total surplus value 154 202 179 146 216 Total solvency capital 13,525 11,614 10,072 8,821 8,615 Capital base 13,427 11,563 10,033 8,548 7,838 Required solvency margin 1,655 1,550 1404 1,296 1,263 Consolidated capital base 13,609 11,699 10,110 8,607 7,971 Consolidated solvency margin 2,342 2,048 1,655 1,509 1,443 Key ratios Earnings from PC insurance business Claims ratio 82 83 86 82 79 Expense ratio 18 19 18 17 18 Combined ratio 100 102 104 99 97 Earnings from asset management Yield, per cent 3 2.5 2.7 3.2 2.3 3.0 Total return, per cent 7.7 8.2 6.9 6.7 8.1 Financial position Solvency ratio, per cent 149 139 121 110 113 1 Restated owing to changed accounting principles of tangible assets and techni- cal provisions. 2 Restated owning to changed accounting principle of expenditures for develop- ment of internally generated intangible assets in accordance with RFR2. Earlier years are not recalculated in respect of this change of principle. 3 Restated owing to changed accounting principles for provisions to pensions and similar liabilities. Earlier years are not recalculated in respect of this change of principle. 4 Yield has been restated for 2009 according to the change regulations FFFS 2009:12. Presented key ratios with regard to yield for 2008 are calculated in accordance with FFFS 2008:26.

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