SWEDEN - Alecta, the Swedish occupational pensions provider, is remaining cautious following recent crises to hit the insurance industry, despite an upturn in first half profits.
Lars Otterbeck, president of Alecta, said: “The decline in value on the world’s stock exchanges that has so negatively impacted the life insurance industry over a long period of time has been halted.
“It is still too early to say, however, whether we have seen the end of this crisis or whether this is just a temporary upswing.”
Profit after tax amounted to SEK11.5bn, compared to a loss of SEK29bn for the same period last year.
The increase in earnings was mainly due to a SEK39.7bn rise in investment income to SEK14.1bn, attributable largely to an increase in the stock markets.
Total return on investments amounted to 5.0%.
Net investments were primarily in fixed-income securities. The market value of investments on June 30 was SEK296.3bn (2002: SEK300.9bn).
But premiums written amounted to SEK9.6 bn, down by some SEK3bn, due to the elimination of premium reductions on retirement and family pensions at the start of 2003.
“The main reasons why premiums written still fell by 23% compared with the first half of 2002 were lower single premiums and lower inflation adjustments of ITP pensions, “ added Otterbeck.
Alecta described its figures as “better than the sector average” for the first half of the year.
“That means Alecta will continue to be able to meet its pension obligations,” added Otterbeck
As of 30 June, Alecta’s collective funding ratio was 118%. This has since reached 119%, the highest figure since April 2002.
The company - which covers the occupational pensions of some 1.5 million Swedish employees - added that it aims to raise awareness of the ITP occupational pension among its customers.
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