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 Consumer Confidence Manufacturing Industry Indicators Index=100, Monthly data Index=100, Monthly data 130 130 120 120 110 110 100 100 90 90 80 80 70 70 60 60 50 50 2006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012 2013 2014 2014 2015 2016 2016 2017 2018 2006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012 2013 2014 2014 2015 2016 2016 2017 2018 USA Euro area PMI, USA Confidensindicator, Euro area Source: Konjunkturinstitutet, Conference Source: IMF , OECD, Macrobond and Board, Europeiska kommissionen and Konjunkturinstitutet. Macrobond.
Unemployment GDP Growth Per cent of labour force, Percentual change, Seasonally adjusted data Annual data 14 8 12 6 10 4 8 2 6 0 4 -2 2 -4 0 -6 2000 2000 2001 2002 2003 2004 2005 2005 2006 2007 2008 2009 2010 2010 2011 2012 2013 2014 2015 2015 2016 2017 World US Euro area Euro area Germany Japan GB US Source: Konjunkturinstitutet and Source: IMF , OECD, Macrobond and Macrobond. Konjunkturinstitutet.
Increased optimism about growth has been reflected in higher equity prices Stock market indices 100 = 2010-01-01 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Sweden (OMXS 30) US (S&P 500) Germany (DAX) Sources: Nasdaq OMX Nordic, Börse Frankfurt and S&P .
GDP growth Import-adjusted contribution to GDP growth Percental change and per cent units 6 4 2 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 -2 Household consumption Government consumption expenditure Fixed gross investments Changes in inventories Export of goods and services Source: Konjunkturinstitutet.
Hourly earnings in business Lack of labour in the sector, local and central business sector government Share of yes-answers, Seasonally adjusted Percental change, seasonally adjusted values halfyear-values 40 6 35 5 30 4 25 20 3 15 2 10 1 5 0 0 2005 2005 2006 2007 2007 2008 2009 2009 2010 2011 2011 2012 2013 2013 2014 2015 2015 2016 2017 Business sector Average 2005-2017 Business sector Local government Central government sector
The Swedish inflation is still below the target Annual percentage change 3,0 2,5 2,0 1,5 1,0 0,5 0,0 2012 2013 2014 2015 2016 2017 2018 CPIF CPIF excluding energy Note: CPIF is the consumer price index with a fixed interest rate. Source: Statistics Sweden.
Low interest rates forever? Per cent 6 5 4 3 2 1 0 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 -1 Repo rate Yield on Swedish 10-year government bond Source: The Riksbank. Note: The doted line is the Riksbank’s forecast of the repo rate ( Monetary policy report February 2018 ).
And then there is the Riksbank’s holdings of government bonds Billion SEK (left axis) and percentage (right axis) 500 50 400 40 300 30 200 20 100 10 0 0 The Riksbank's holdings of government bonds (total nominal amount) As share of government bonds issued in SEK (right axis) Sources: The Riksbank and Note: Both nominal and inflation-linked are included in the Riksgälden. government bonds. The doted line is the Riksbank’s forecast of its holdings ( Monetary policy report February 2018 ).
Good return on life insurance companies' assets despite low interest rates Per cent 15 10 5 0 -5 -10 Annual average total return on life insurers' assets Yield on Swedish 10-year government bond (at year-end) Sources: Insurance Sweden and Note: The annual average total return is weighted the Riksbank. with the market value of the assets on which the total return is based on.
A relatively large share of Swedish insurers’ assets are equities Insurance companies holdings of assets December 2016, per cent 100 90 11,9 80 16,7 70 18,0 60 29,6 50 30,4 40 30 27,6 20 28,9 10 15,0 0 Sweden EU average Government bonds Corporate and bank bonds Equities Investment funds Loans Properties Cash/deposits Other Note: Refers to insurance companies reporting under Source: EIOPA. Solvency II. Unit-linked is excluded.
Life insurance companies have not actively increased their risk taking Share of Swedish life insurance companies' assets, percent 100 90 80 70 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 Deposits Bonds Equities Loans Real estate Other Source: Statistics Note: Assets that belong to unit linked are excluded. Equities also include Sweden. investment funds. Real estate refers to buildings and wholly owned property companies. Other includes e.g. repo and derivatives.
Swedish insurance companies have a strong financial position Solvency ratios in Solvency II, Q2 2017, per cent 1000 900 800 700 600 500 400 300 200 100 0 MCR ratio SCR ratio Note: The ratios are a weighted average for the Source: EIOPA. countries’ insurance companies. The dashed line is the requirement of these ratios in Solvency 2 (100 %)
Premium payments life insurance – a growing market 250 000 200 000 150 000 100 000 50 000 0 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 Källa: Finansinspektionen Others
Risks and uncertainties
Thank you for your attention! For further contact: anna.pettersson.westerberg@insurancesweden.se www.insurancesweden.se
Recommend
More recommend
