Future focus To a considerable extent, industrial customers are becoming more professional and more aware of the complexity of insurance and risk-management matters. During 2005, more companies strengthened their internal risk-management activities, partly as a result of more stringent legal requirements and changed accounting principles. If will continue to invest in skills-enhancement activities involving insurance counseling and risk management in order to safeguard its competitiveness, and will continue to be an important business partner in risk-related matters.
Accordingly, If will focus on strengthening its cooperation with customers and insurance brokers in the future, and on developing and improving service solutions that satisfy the recipients’ requirements.
If will also develop insurance solutions and products that meet changed market requirements. One of the main areas of such work at present involves personnel injury products, such as accident insurance, group life insurance, health insurance and travel insurance, since these products are expected to become a significant part of the Nordic companies ’ future compensation packages to employees.
If is the market leader in Estonia, with a market share of 41%. If has a market share of 10% in Lithuania and 9% in Latvia. The number of customers is 300,000.
Premium growth amounted to 16%, as a result of very strong growth in Latvia and Lithuania, of 28% and 35%, respectively. The strong growth was mainly attributable to motor insurance.
The increase in the risk ratio compared with the preceding year was expected because of the unusually low claims trend reported in 2004, due to favorable weather and much fewer claims than usual. Consequently, the risk ratio increased from 54% to 59%. The storms experienced at the beginning of 2005 increased the risk ratio by 1.5 percentage points. Increased claims costs within motor third party liability insurance also had an adverse impact on the risk ratio.
Activities during the year If ’s growth in Latvia and Lithuania during the year far exceeded the market average.
In Estonia, the growth rate was in line with the market as a whole. To sustain profitability and while simultaneously growing, the focus remains on risk selection and correct pricing. Since improved risk management among companies and private individuals contributes to sustainable and profitable growth, activities in this area were implemented during the year. In Estonia, a special unit was also formed to offer commercial customers improved service.
Risk ratio Cost ratio Net premiums earned faction and loyalty, while simultaneously enhancing risk levels within the portfolio. In Lithuania, several similar actions were taken successfully during the year. Within the segment for heavy road transports, for example, drivers have been trained and practical training provided in claims-prevention measures.
Cost control continues to account for an important part of profitability. As a result of the higher acquisition cost for insurance contracts, lower average premiums and a low rate of automation within work processes, cost levels are higher in relation to those within the Nordic operations. Accordingly, continued action was taken during the year to further increase the efficiency of the work processes within sales and other areas. The gradual centralization of the customer service helped to shorten administrative times, reduce costs and increase customer satisfaction. In Estonia, a service center was established for private customers, which has created conditions for increased efficiency and sales growth.
As a result of ongoing process development and efficiency improvements, If, as the first company in Latvia, was able to introduce time guarantees for claims
There are several ways of selling insurance efficiently and in a customer-friendly manner. In Estonia, for example, you can purchase motor third party liability cover while filling up at a gasoline station.
Combined ratioTechnical resultGross premiums written handling in its terms and conditions. In Lithuania, a changed organization of customer service operations improved both quality and efficiency. In addition, claims-handling efficiency was increased and the number of claims handled per employee rose by 40% during the year.
Future focus The Baltic insurance market changed during the year, since a number of local players expanded their operations to include all Baltic countries. The competition has intensified somewhat, particularly within the segments that handle major risks, because international players have become increasingly active in the market. Competition also sharpened in the traffic damage area during the year, particularly in Latvia and Lithuania.
Clear focus areas: skills development and management quality The ability to attract, develop, retain and consolidate employee skills is important for future profitability, particularly in a service company such as If. The “Best in risk” venture launched during the year entails a greater focus on understanding and managing all aspects of customer risks. This means that employees will play a more central role. Correct expertise and the right level of motivation among employees are essential to this strategic approach. Accordingly, If further increased its level of ambition for skills development and management during the year.
During the year, skills and management development and the supply of managers was in focus. If established the following in 2005: • A company-wide skills organization responsible for an annual skills analysis and renewal process
• Analysis of skills to identify and develop employees with the greatest potential
• Successor planning aimed at ensuring that the correct expertise is available or is being developed to shoulder key positions in the future
• Programs for supplementing the internal manager-supply processes with external talents. A successful venture for recruiting future managers with 6 -10 years’ managerial experience was completed during the year.
Number of employees per country Age distribution Operating result per employee
During 2005, If in Finland distributed a total of 170,000 safety items to children and adults, with the aim of promoting the safety of its insurance customers in accordance with If’s objective of being a supplier of safety and security to the
“Through this campaign, we want to participate in efforts to increase child safety when children are outdoors, both in the dark and in daylight. The campaign is part of If’s educational work aimed at promoting safety and preventing injuries,” says
The insurance companies decided immediately to take collective responsibility so that all those affected by the disaster would quickly receive medical care locally or be transported home to Sweden. Thereafter, assistance was provided by handling claims quickly and efficiently.
If ’s sponsorship must actively demonstrate a social responsibility and primarily involve areas linked to insurance operations. If cooperates with organizations that actively contribute to making society safer by working, on a long-term basis, to discourage negative phenomena such as segregation and alienation, for example by working with the Swedish Fryshuset Youth Activity Center and the Norwegian Association of Antidrug Police Officers. These organizations work to prevent youths from coming into contact with drugs and crime.
If promotes a safe and secure society At the very core of property and casualty insurance is a promise to provide help when claims occur. Accordingly, the insurance industry, together with public authorities such as the police, emergency services and judicial system, is one of society’s most important providers of security to citizens and the business community. Insurance also provides companies with predictability and stability, which are necessary for being able to take business risks. Therefore, it is natural for If to strive for a society in which everyone can live securely.
Allocated investment return transferred from the non technical account 1,537 1,816 1,935 2,332 1,982
The Group’s total overdraft facilities amounted to MSEK 213 (198). Utilized portion: MSEK 0 (-).
Technical account of property and casualty insurance Premiums earned, net of insurance
Change in provision for unearned premiums and unexpired risks -106 -7
Reinsurers share of change in provision for unearned premiums and unexpired risks 140 -206
Technical provisions Provisions for unearned premiums, unexpired risks and claims outstanding. Technical result Premiums earned less claims costs and operating expenses, plus the allocated investment return transferred from the nontechnical accounts and other technical income. Total investment return Sum total of direct return and realized and unrealized changes in value expressed as a percentage of the fair value of investment assets. The daily time weighted method has been used to calculate the return on active investments. The monthly time weighted method has been used to calculate the return on properties and other investments. The return has been calculated with the calculation methods used internally by If for the evaluation of asset management.
Holding Ltd’s annual report for 2005 and has not been examined by the Company’s auditors. If P&C
Insurance Holding Ltd’s complete annual report for 2005 is available at www.if-insurance.com and www.sampo.com.
Swedish and Finnish. In the event of any differences in the language versions, the Swedish version shall prevail.