Alecta Pensionsforsakring: Year-End Report 2000 Premium Income Increased 6 Percent.

Business Editors

STOCKHOLM, Sweden--(BUSINESS WIRE)--March 6, 2001

-- Premium income of Alecta pensionsforsakring, omsesidigt (formerly Forsakringsbolaget SPP, omsesidigt) increased 6.4 percent, to SEK 16,608 M (1999: 15,615).

-- The collective reserve increased to SEK 71.9 billion (66.5), and the solvency margin was 127 percent (124).

-- The expense ratio amounted to 3.4 percent (2.9) and management expense ratio to 0.20 percent (0.19).

-- As of December 31, 2000, investments had a market value of SEK 353.3 billion (355.0). The total return on investments was 6.2 percent (20.0). Alecta seeks long-term, orderly growth in value, with a good risk- adjusted return on investments; at year-end it had approximately 48 percent (invested) in interest-bearing assets, 42 percent in equity, and 10 percent in real estate.

-- Profit for the year amounted to SEK 3.2 billion (49.3). The decline in profit was due primarily to the fact that the return of capital decreased by SEK 42.5 billion. The return on equity was negative and amounted to -1.9 percent (50.4), while the return on interest-bearing investments was 9.2 percent (-1.5 percent), and the return on real estate was 19.4 percent (16.2). Profit was charged with a special provision of SEK 6.7 billion to the premium reserve, for the reduced premium reserve interest rate approved by the Financial Supervisory Authority in 1999. The new Swedish Insurance Business Act, adopted in 2000, does not permit continuing allocations based on so-called "transition grounds," as Alecta had earlier decided to apply over a ten-year period. The remaining provision of SEK 18.1 billion will be recognized as income not later than December 31, 2001.

-- Alecta paid out SEK 8.0 billion (8.1) in insurance payments, and bonuses amounted to SEK 7.5 billion (7.9). During 2000 customer companies claimed SEK 17 billion from the 1994-1998 excess consolidation funds for pensions of SEK 78 billion. An additional SEK 48 billion remains for the same purpose. Insured persons will receive SEK 12 billion from the surplus consolidation, and SEK 5 billion will remain for future pension improvements.

-- The capital gain as a result of the sale of SPP Liv, SPP Fonder and the SPP brand name to Handelsbanken amounted to SEK 6.9 billion and will be included in Alecta's accounts for 2001.

Comment by the president

Increased efficiency and focusing make me optimistic 

Since February 1, 2001, Alecta pensionsforsakring, omsesidigt has been the name of the former Forsakringsbolaget SPP, omsesidigt. We are the largest pension fund manager in the Nordic region and we have a single objective: to offer customers the best collective-agreement pension plans. The rapidly growing operations in the competitive market have a new owner that is taking over the old brand name.

Alecta has about four fifths of the assets managed in the old SPP Group, about half of the employees and approximately 60 percent of the premium income. We manage the ITP pension plan for SAF and PTK and thus do not compete with the market's life insurance and pension insurance companies.

On March 7, Handelsbanken is taking over SPP Liv, SPP Fonder and the SPP brand name. SPP Liv will thereby be able to continue its special concept that focuses on the workplace as a marketplace. The bank is being provided with a sales channel that is rather unique in the Swedish market. SPP's successes in premium pension selection showed the strength of the brand name and of the market position that SPP Liv has established.

Alecta will conduct a large-scale homogeneous business with a high degree of efficiency, and is in a position to become highly cost-effective. We will be suppliers of defined-benefit collective-agreement pension plans, with our core business in ITP. There are important challenges for us in the new agreement that the parties are negotiating, also when there is a need for a central coordinating organ.

I am very optimistic about the future for Alecta. The key to success in the years immediately ahead lies in our ability to maintain a return on capital that is above average, and in our gradually becoming even more efficient in managing the ITP plan. In this way Alecta can position itself to play a distinct role in the new ITP agreement that will probably be the result of the current negotiations.

Lars Otterbeck President of Alecta

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