Länsförsäkringar AB’s acquisition of Länförsäkringar Fondliv
Länsförsäkringar AB’s acquisition of Länsförsäkringar Fondliv from Länsförsäkringar Liv completed – to become best pension partner for business owners
THU, OCT 27, 2011 11:00 CET
The acquisition of the unit-linked insurance company, Länsförsäkringar Fondliv, is part of Länsförsäkringar’s campaign in the occupational pension market. Resources for improving the fund range and product and business development are being strengthened to meet the demands of the business owner. The efforts also include an expanded focus on the life insurance broker market.
“Our long-planned acquisition of Länsförsäkringar Fondliv marks the start of Länsförsäkringar’s campaign to become small businesses’ first choice of pension partner, and thereby number one on the occupational pension market,” says Sten Dunér, President ofLänsförsäkringarAB.
“The timing of the acquisition has naturally been expedited due to trends in the financial markets and the need to assist the traditional life assurance company strengthen its key figures. With the unit-linked insurance company as a base, we are taking an important step in our long-term strategy of standing alongside our customers by offering advisory services from the start of their pension savings to actual pension payment. We want to ensure customised savings based on customers’ individuals circumstances,” continues Sten Dunér.
Länsförsäkringar AB, which is owned by the 23 regional insurance companies, will acquire all of the shares in Länsförsäkringar Fondliv Försäkringsaktiebolag from Länsförsäkringar Liv Försäkringsaktiebolag. The purchase price amounts to SEK 4,400 M, plus an additional purchase price of SEK 950 M, which will be paid in equal sums over seven years, meaning that the present value of the purchase consideration totals approximately SEK 5 billion. The purchase is contingent on the relevant authorities not raising any objections to the transaction and Länsförsäkringar continuously providing information about the transaction to the Swedish Financial Supervisory Board. The parties engaged in an extensive negotiation process, which was performed with the assistance of external advisors. The negotiated terms of the transaction were subse-quently examined by three independent parties appointed by the purchaser and the seller. For more detailed information about the acquisition, refer to Appendix 1.
Länsförsäkringar’s long-term strategy is to conduct pension activities in a profit-distributing company that, together with the banking activities, is owned by the 23 regional insurance companies. The changes that are now being implemented are part of this strategy but have been accelerated by the trends prevailing on the financial markets and Länsförsäkringar Liv’s need to reduce the risks inherent in its investment assets.
About the campaign in the occupational pension market
The very core of the pension systems has altered over the past 20 years. The response-bility for pensions has been transferred successively from the state and employer to the individual. The amount of future pensions depends on the ability of the individual to successfully manage the funds saved under a pension scheme. More and more people perceive pension savings to be complex and difficult to understand.
Traditional guarantee products will gradually decline since the trends in the financial markets have rendered them too risky and expensive. Solutions based on promises of pension amounts have instead been replaced in a number of areas by solutions that are based on reserving a certain premium every year.
Meanwhile, pension savings have become more important than ever before since the gap between salary and national pension is gradually widening and will be large for an increasing number of Swedes. Pension savings are particularly important to owners of small businesses who do not have collective agreement pensions as those received by employees at workplaces with such agreement schemes through their employment.
“The basis of our campaign is that there is a rapidly increasing need to improve pensions in a variety of ways. It is essential to start saving in good time and reserve a sufficiently large amount. It is also very important to manage these pension savings in the best possible way to receive as high a pension as possible for every penny saved. Länsförsäkringar will assist its customers all the way to improve their savings. The more often we meet our customers over the course of their entire savings period, the better the individual advice that we will be able to provide,” says Mats Wester, Länsförsäkringar’s Savings Expert.
More than 40% of Länsförsäkringar’s total life-assurance sales are made by brokers. An increasing number of companies are opting to be represented by an insurance broker. Länsförsäkringar’s focus on customer meetings has accelerated process and product development and the changes and measures that Länsförsäkringar is now taking.
Länsförsäkringar’s long-term venture involves an enhanced approach with advisory services provided continuously throughout the savings process, from the very beginning when savings are first started, throughout the savings period, prior to and while pension payments are made.
Under this new venture, Länsförsäkringar will, over the next three years, contact the majority of all of Sweden’s small companies with 0-9 employees to review their pensions and discuss their total requirements for insurance, pension and banking services.
Link to press release: