A macroeconomic outlook and a snapshot of the investement trends in - - PowerPoint PPT Presentation

A macroeconomic outlook and a snapshot of the investement trends in life insurance

Anna Pettersson Westerberg, Insurance Sweden

10 years ago…

Economic growth in all countries at the same time

Source: IMF

Confidence Indicators Manufacturing Industry

Index=100, Monthly data

Consumer Confidence Indicators

Index=100, Monthly data

Source: IMF , OECD, Macrobond and Konjunkturinstitutet. Source: Konjunkturinstitutet, Conference Board, Europeiska kommissionen and Macrobond. 50 60 70 80 90 100 110 120 130 2006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012 2013 2014 2014 2015 2016 2016 2017 2018

PMI, USA Confidensindicator, Euro area

50 60 70 80 90 100 110 120 130 2006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012 2013 2014 2014 2015 2016 2016 2017 2018

USA Euro area

Unemployment

Per cent of labour force, Seasonally adjusted data

GDP Growth

Percentual change, Annual data

Source: IMF , OECD, Macrobond and Konjunkturinstitutet. Source: Konjunkturinstitutet and Macrobond. 2 4 6 8 10 12 14 2000 2000 2001 2002 2003 2004 2005 2005 2006 2007 2008 2009 2010 2010 2011 2012 2013 2014 2015 2015 2016 2017

Euro area Germany Japan GB US

• 6
• 4
• 2

2 4 6 8

World US Euro area

Increased optimism about growth has been reflected in higher equity prices

Stock market indices 100 = 2010-01-01

Sources: Nasdaq OMX Nordic, Börse Frankfurt and S&P .

50 100 150 200 250 300 2010 2011 2012 2013 2014 2015 2016 2017 2018

Sweden (OMXS 30) US (S&P 500) Germany (DAX)

Import-adjusted contribution to GDP growth Percental change and per cent units

GDP growth

Source: Konjunkturinstitutet.

• 2

2 4 6 2011 2012 2013 2014 2015 2016 2017 2018 2019

Household consumption Government consumption expenditure Fixed gross investments Changes in inventories Export of goods and services

Lack of labour in the business sector

Share of yes-answers, Seasonally adjusted halfyear-values

Hourly earnings in business sector, local and central government

Percental change, seasonally adjusted values 1 2 3 4 5 6

Business sector Local government Central government sector

5 10 15 20 25 30 35 40

2005 2005 2006 2007 2007 2008 2009 2009 2010 2011 2011 2012 2013 2013 2014 2015 2015 2016 2017

Business sector Average 2005-2017

The Swedish inflation is still below the target

Annual percentage change

0,0 0,5 1,0 1,5 2,0 2,5 3,0 2012 2013 2014 2015 2016 2017 2018 CPIF CPIF excluding energy Source: Statistics Sweden. Note: CPIF is the consumer price index with a fixed interest rate.

Low interest rates forever?

Per cent

Source: The Riksbank. Note: The doted line is the Riksbank’s forecast of the repo rate (Monetary policy report February 2018).

• 1

1 2 3 4 5 6

2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Repo rate Yield on Swedish 10-year government bond

And then there is the Riksbank’s holdings

• f government bonds

Billion SEK (left axis) and percentage (right axis)

Sources: The Riksbank and Riksgälden. Note: Both nominal and inflation-linked are included in the government bonds. The doted line is the Riksbank’s forecast of its holdings (Monetary policy report February 2018). 10 20 30 40 50 100 200 300 400 500 The Riksbank's holdings of government bonds (total nominal amount) As share of government bonds issued in SEK (right axis)

Good return on life insurance companies' assets despite low interest rates

Per cent

Sources: Insurance Sweden and the Riksbank. Note: The annual average total return is weighted with the market value of the assets on which the total return is based on.

• 10
• 5

5 10 15

Annual average total return on life insurers' assets Yield on Swedish 10-year government bond (at year-end)

A relatively large share of Swedish insurers’ assets are equities

Insurance companies holdings of assets December 2016, per cent

Source: EIOPA. Note: Refers to insurance companies reporting under Solvency II. Unit-linked is excluded. 15,0 28,9 27,6 30,4 29,6 18,0 16,7 11,9

10 20 30 40 50 60 70 80 90 100 Sweden EU average

Government bonds Corporate and bank bonds Equities Investment funds Loans Properties Cash/deposits Other

Life insurance companies have not actively increased their risk taking

Share of Swedish life insurance companies' assets, percent

Source: Statistics Sweden. Note: Assets that belong to unit linked are excluded. Equities also include investment funds. Real estate refers to buildings and wholly owned property companies. Other includes e.g. repo and derivatives.

10 20 30 40 50 60 70 80 90 100 2010 2011 2012 2013 2014 2015 2016 2017 2018

Deposits Bonds Equities Loans Real estate Other

100 200 300 400 500 600 700 800 900 1000

MCR ratio SCR ratio

Swedish insurance companies have a strong financial position

Solvency ratios in Solvency II, Q2 2017, per cent

Source: EIOPA. Note: The ratios are a weighted average for the countries’ insurance companies. The dashed line is the requirement of these ratios in Solvency 2 (100 %)

Premium payments life insurance – a growing market

50 000 100 000 150 000 200 000 250 000 2011 2012 2013 2014 2015 2016 2017 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Occupational pension Private equity insurance for occupational pension Private pension Private equity insurance Others

Källa: Finansinspektionen

Risks and uncertainties

Thank you for your attention!

For further contact:

anna.pettersson.westerberg@insurancesweden.se www.insurancesweden.se