In reporting its first half results to the end of June, Swedish insurer AMF has issued a warning that despite strong returns from equity over the period, the performance of markets actually reflected growing concerns about a downturn in the global economy, which the insurer has braced for through taking additional long-term positions, including unlisted companies and alternative asset classes such as forrests.
Total return for the period was reported as 8.1% (in SEK) compared with 3.5% for the same period a year ago. There was a drop in the solvency ratio to 186% from 198% after some SEK11.2bn were put aside to strengthen guarantees. Management costs for traditional insurance were SEK0.11 per SEK100 of managed capital. The average annual return over the past five years has been 7.3%, and 7.9% over 10 years. Total assets under management of AMF Fonder at the end of the period were SEK140bn (€13bn), while total assets managed on behalf of the AMF group, which includes parent AMF, AMF Fastigheter and AMF Fonder, was SEK649bn (€60.5bn).
Johan Sidenmark, chief executive, said: "We delivered positive return of 8.1% to our four million savers during the half year. Equity markets were strong duringt he spring, and our other assets have also developed reasonably positively. This is naturally welcome, but one should consider that the gains partly have come because of signs of a weaker global economy leading to expectations of a looser monetary policy. And that dark clouds in the form of an escalating trade war, Brexit and other uncertainties continue to hover over the horizon. Therefore, it feels good and important that we during the sprink have been on the offensive to take important steps to ensure a competitive return even in a tougher economic situation."
Tomas Flodén, CIO, deputy chief executive at AMF, added: "As a traditional pension manager we have a long term investment horizon and great freedom to act, which we want to use in our management. We want to incresingly invest early in companies, we want to remain a long time and contribute to the change in the economy. During the spring we made big investments in forrest, through growing in SCA, where we now are the biggest owner measured in capital, and through the agreement to acquire the majority of equities in Bergvik Skog Öst. We also invested in two promising unlisted Swedish innovation companies with strong sustainability angles; Northvolt and Exeger. These investments in new asset classes continue to broaden our portfolio and spread our risks, in the same way that recent years' investments in property and wind power have done. This feels positive, not least because of record low interest rates and the prevailing economic climate."
The full interim report will be made available on AMF's website at the end of August: www.amf.se