Continued stable finances for Alecta after strong positive returns and high cost efficiency

19 July 2021

Alecta’s financial report for the first half of 2021. Figures in parentheses refer to key figures as of 30 June 2020.

• Alecta Optimal Pension’s return was 10.3 percent (5.6) at an annual rate over the past five-year period.
• Defined benefit insurance return was 7.1 percent (4.5) at an annual rate over the past five-year period.
• The solvency ratio for the Group was 187 percent (157).
• The management expense ratio for the Group was 0.08 percent (0.08).
• The asset management expense ratio was 0.021 percent (0.022).

Alecta’s financial position remains very strong after the first half of 2021, with a solvency ratio of 187 percent. Alecta’s defined-contribution savings product Alecta Optimal Pension gave a return of 12.4 percent during the first half of 2021. The return for Alecta’s defined benefit insurance was 7.7 percent.

– Alecta has also delivered a good return this half year and continues to have a strong financial position. We have done this with a clear and disciplined focus on cost efficiency. Alecta has, despite the challenges of the pandemic, managed to ensure a very good result for Alecta’s customers. All our customers have good reasons to feel secure that we continue to create customer value through a long-term good return on their pension capital at a very low fee, says Magnus Billing, CEO of Alecta.

The good return during the period is mainly attributable to the development in the equity portfolio, but also to continued active work to find a good return from the interest-bearing investments and the broadening of the asset portfolio towards more alternative investments such as real estate, infrastructure and alternative loans.

During the spring, Alecta’s newly formed real estate company Alecta Fastigheter AB built up an organization with just over twenty employees. Management team and board and structure for management, sales and marketing are in place.

In addition, Alecta has made investments in unlisted companies, such as Epidemic Sound, which operates a digital music platform, and Stena Renawable, active in renewable energy, as well as the energy company Stockholm Exergi and in Telia’s mast operations in Finland and Norway. Furthermore, Alecta has invested in a bond for social sustainability, where the capital is earmarked to support improved access to health and sanitation, reduction of pollution through renewable energy and sustainably produced food.

Alecta has continued to manage to maintain customer service at the same good level as before the pandemic, despite the fact that the work has been done remotely. Customer satisfaction has increased during the period.

– It is thanks to my fantastic colleagues and their strong commitment to our customers. Our continuous and ambitious work to develop our digital customer meeting in accordance with our digitalisation strategy has also clearly contributed to the fine customer satisfaction development, says Magnus Billing.

Alecta has submitted an application to Finansinspektionen to be transformed into an occupational pension company in accordance with the new occupational pension regulation. Following a transformation, Alecta will have a set of rules for, for example, investments, risk-taking and financial stability that is more adapted to the type of business the company conducts, which further increases the possibility of managing occupational pensions efficiently and creating value for customers.

Premium insurance

Alecta’s premium savings product Alecta Optimal Pension gave a return of 12.4 percent during the first half of 2021. During the five-year period until the end of June 2021, Alecta Optimal Pension’s total return was 10.3 percent on average per year.

The information about Alecta Optimal Pension refers to the pre-selection portfolio with 60 percent shares. In defined-contribution insurance, the size of the pension is determined on the basis of the insured’s paid premiums and return.

Assets under management in the total portfolio for Alecta Optimal Pension amounted to SEK 198 billion (147) at the end of the period.

Defined benefit insurance

The return on Alecta’s defined benefit insurance was 7.7 percent during the first half of 2021. Over the past five-year period, the average annual return has been 7.1 percent. In defined benefit insurance, the collective consolidation amounted to 165 percent on June 30, 2021.

In defined benefit insurance, the size of the pension is determined on the basis of the insured’s salary and length of service. Over time, the return is primarily important for employers’ pension costs.

Assets under management in the total portfolio for defined benefit insurance amounted to SEK 936 billion (816) at the end of the period.

Alecta’s solvency ratio was 187 percent on June 30, 2021.

Total capital managed by Alecta was SEK 1,134 billion (963) at the end of the period.

Source: Alecta