Our assets management
The insurance premiums paid into the association together make up the assets that we manage. We have long experience of strategic investment management and our main goal is the creation of good long-term returns on your pension capital.
Insurance with a guarantee
A traditional pension insurance means among other things that the capital is guaranteed not to reduce in size. For our insurances, the guarantee consists of a guaranteed interest of 1 percent per year which you receive on 80 percent of the premiums paid by your employer. That we only apply the guarantee to 80 percent of the premiums paid by your employer allows us to place some of your capital in assets with a higher expected returns but also a higher risk.
Solvency ratio – the balance between guarantee and surplus
The association builds up a common risk capital based on paid-in premiums and the surplus created by investment management over time. The extent to which the assets exceed the association’s guaranteed commitments to its members is called the solvency ratio. The association has an adequate solvency ratio but this varies between years in step with the value changes in assets and liabilities.
Balance between risk and return
Managing assets within the framework of a traditional pension insurance relies on finding a balance between taking risks and expected returns. Capital is therefore invested based on the association’s risk policy which has been produced by the association’s Board. The policy stipulates that investments must be made in many different asset classes. Investments must also be made in many different securities so that no single investment constitutes too big a risk.
Investments in different asset classes
Based on the risk policy and our investment guidelines, we divide the managed capital across three main investment areas, equities, bonds and property. Together these constitute a well-balanced portfolio. Fixed-income securities are expected to provide stable returns and performance over time. Equities are more risky investments which means that the performance can swing both up and down but are expected to provide a higher return over time. Investments in real estate and similar asset types are a good complement to investments in equities and fixed-income securities. All assets are continuously given a market value so that we always have the value of the association’s assets. The increase in value accrues to your insurance in the form of bonus interest.
For our all our products except for Kåpan Aktieval we take your age into account to decide the risk distribution for your capital. If you are young and have a long time until you retire you will get a higher risk in your savings to give the possibility of a higher return. Investments with greater risk are expected to provide a higher return over time than more stable investments, but value development can fluctuate considerably more during this time. This means in turn that the risk in your savings reduces in step with your approaching retirement. When you are older you get more stability in your savings. We split the saved capital into three different age categories with different asset allocation between the three main investment areas. The allocation can vary within a range set by the Board in the society’s risk policy.
In Kåpan Aktieval your capital is invested exclusively in equity until you start withdrawing your pension.
Collective consolidation level is a measure of the value of the assets that the association has in relation to the members' total insurance capital. If the collective consolidation level is below 100 per cent, this means that the value of the assets is less than the value of the total insurance capital. A collective consolidation of more than 100 percent means that the assets are larger and that there is a buffer for a negative development in the capital market.
According to our guidelines for consolidation, the value of our assets must be preliminarily distributed to all insurances each month. This means that the bonus interest rate is set so that the consolidation level amounts to 100 percent at the end of each month.
Our asset management model