Svenska Handelsbanken : Handelsbanken Liv Annual report 2023

Annual Report

2023

Liv

Contents

About Handelsbanken Liv	2
The year in brief	3
THE CHIEF EXECUTIVE'S COMMENTS	4
Administration report	6
Five-year overview	12
FINANCIAL REPORTS
Alternative income statement	13
Income statement	14
Statement of comprehensive income	14
Analysis of results	15
Balance sheet - assets	16
Balance sheet - liabilities	17
Statement of changes in equity	18
Notes	19
SIGNATURES OF THE BOARD
AND CHIEF EXECUTIVE	35
AUDITOR'S REPORT	36
BOARD AND MANAGEMENT	39
DEFINITIONS	40

Handelsbanken Liv Försäkrings AB Corporate identity number: 516401-8284 Registered office: Stockholm handelsbanken.se/liv

This Annual Report is also available in Swedish.

HANDELSBANKEN LIV | ANNUAL REPORT 2023 1

About Handelsbanken Liv

Insurance for a more secure life and a richer future

Handelsbanken Liv is Handelsbanken's life insurance company and is a wholly owned subsidiary. The life insurance company's insurance policies are distributed through Handelsbanken's branch offices in Sweden, and our vision is to ­contribute towards greater security in life and a richer future. Handelsbanken Liv has assets under management of approximately SEK 250 billion and employs around 100 people.

The year in brief

Chosen for the ITP occupational pension

We were again chosen as one of the investment alternatives for private sector salaried employees' occupational pensions. The current ITP agreement applies for the next five year-period and covers over two million workers.

Sweden's first Nordic Swan eco­ labelled occupational pension The occupational pension offering was bolsetered with the entry solution 'Hållbar Pension', Sweden's first Nordic Swan ecolabelled occupational pension.

Seamless migration to new insurance system

The first insurance contracts were migrated to our new insurance ­system during the year, giving us the opportunity to offer our customers more digital services while also improving our efficiency as a company.

Assets under management	Customers
252	1.2
billion SEK	million insurance
	contracts

Profit	Percentage of sustainability-­
before tax	classed funds in our range
1,479	95%
million SEK	Classed according to the EU's SFDR
	as Article 8 or Article 9 funds1

Completed sale of Norwegian portfolio­

The transfer of the Norwegian risk insurance portfolio was completed, representing an important marker towards the streamlining of our focus to the Swedish market.

1 Article 8 means that the fund promotes environmental or social characteristics. Article 9 means that the fund has sustainable investment as its objective.

Top fund selection for ITP occupational pension Handelsbanken Liv is the best fund choice and has the most dark green funds in the ITP selection, according to the Private Affärer financial magazine.

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The Chief Executive's comments

Together towards better pensions

- for people and the wider society

It should be easy to make good decisions about your finances. With our experience and knowledge, we aim to help our customers make well-informed decisions about their savings. 2023 has been an eventful year in many ways. It seems as though the world is facing turbulent times, and the macroeconomic situation is putting many people's per­ sonal finances under strain. As a pension manager, we continue to support our customers through all stages of their lives, together creating the conditions for long-term economic stability and sustainable development.

REDUCING THE PENSION GAP

The differences in income between women and men were brought into stark relief in 2023 when Claudia Goldin was awarded the Sveriges Riks- bank Prize in Economic Sciences in Memory of Alfred Nobel. It is well known that this income disparity affects pensions. In Sweden, however, the difference between women's and men's pensions is larger than the difference between their incomes. According to the Swedish Pensions Agency, women receive an average of SEK 7,300 less than men in their monthly pension payment, and many studies suggest that it will be over 70 years before pensions are

gender­ equal. We want to change this, and are working actively to raise awareness of how life choices affect incomes, and by extension pen- sions. Together with Handelsbanken, we have trained over 2,000 advisors in gender-equal pensions, and have integrated equality into our advisory tool, which is used by all advisors when meeting customers.

Our mission is to help our customers achieve their financial goals while simultaneously contributing to sustainable develop- ment. Our work towards reaching gender-­ equal pensions plays a key role in this.

IMPROVING OUR CUSTOMERS' ABILITY TO MAKE ENVIRONMENTALLY CONSCIOUS DECISIONS

Another interesting aspect emerged from research published this year, which found that it is difficult for consumers in Sweden to choose green savings for their occupational pensions. We want our customers to feel safe in the knowledge that it is easy to make choices that are positive for both people and the environment when selecting us for their pensions. Since 2021, Handelsbanken Liv has therefore only offered funds that exclude investments in fossil fuel industries, and 95 per cent of all the funds in our range are classified according to the EU's sustainability regulations. During the year, we also launched Sweden's first Nordic Swan ecolabelled occupational pension - the entry solution 'Hållbar Pension'. The Nordic Swan Ecolabel is a Nordic environmental classi- fication, and represents a clear means for us to distinguish ourselves to those looking to save more sustainably.

In order to push more people and companies in the right direction, we participated in the COP28 UN Climate Change Conference, at which we were highlighted as the first insur-

ance company in the world to endorse the global Fossil Fuel Non-Proliferation Treaty Initiative.

FOCUS ON THE SWEDISH MARKET

We strive to be a leading insurance company for occupational pensions for Swedish business owners and employees, and have made progress in the process of transferring our Finnish and Norwegian operations during the year. As part of Handelsbanken's divestment of its business in Finland, Handelsbanken Liv entered into a transfer agreement with Fennia Liv during the second quarter of 2023. The transaction is subject to the customary approval of the public authorities and is expected to be concluded during 2024. During the fourth quarter of 2023, Handelsbanken Liv finalised the transfer of its Norwegian insurance port­ folio, and Handelsbanken Liv's Norwegian branch is set for discontinuation during the first quarter of 2024.

ADVANCES THAT BENEFIT THE

CUSTOMER

2023 was an eventful year at Handelsbanken Liv. In March we found out that we had again

4 HANDELSBANKEN LIV | ANNUAL REPORT 2023

The Chief Executive's comments

been chosen for the ITP unit-linked insurance selection, meaning that for the next five years, Handelsbanken will be one of the five selectable companies in which private sector salaried employees can invest their occupational pension.

An important step in the transition to a new technical infrastructure was also taken during the year, when we transferred the first batch of insurance agreements to our new insurance system. The transition will continue throughout the next few years, giving us the opportunity to gradually offer more and more digital services that make life easier for our customers while also making us a more efficient company. New

features launched for our occupational pension customers in 2023 include the option of signing customer documents digitally, as well as additional functions for managing occupational pensions online.

Despite the high levels of uncertainty in our operating environment, Handelsbanken Liv performed strongly in 2023. Assets under management increased by 15 per cent thanks to a rise in premium payments and value growth.

It should be easy to make good decisions about your finances. When it comes to pen- sions, a minor decision today could have major consequences when we pay out your pension in the future.

I would like to take this opportunity to thank you, our customers, for the confidence you place in us. Together, through your choices and our knowledge - we create the conditions for long-term economic stability and sustainable development.

Stockholm, March 2024

Tobias Lindhe

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Administration report

Administration report

Handelsbanken Liv Försäkringsaktiebolag (Handelsbanken Liv), corporate identity number 516401-8284, has its registered office in Stockholm. The company is a wholly owned subsidiary of Svenska Handelsbanken AB (publ), corporate identity number 502007-7862 (Handelsbanken). The Board and Chief Executive of Handelsbanken Liv hereby submit the annual accounts for the 2023 financial year.

INTRODUCTION

Handelsbanken Liv conducts life insurance operations that include unit-linked and portfolio bond insurance, traditionally managed savings insurance and risk insurance. Our vision is insurance for a more secure life and a richer future.

Operations

Handelsbanken Liv's offering should help our customers achieve their financial goals and contribute to the sustainable development of soci- ety. This will lead to a richer future - planetary health and financial wealth, allied with stability and security. We will achieve this by taking a comprehensive responsibility for customers' needs for savings and insurance throughout their lives, with a focus on solid and sustainable value growth.

Handelsbanken Liv is an accessible insurance company, offering Handelsbanken's customers security through insurance and the flexible management of insurance capital, all characterised by care and simplicity. This is done through Handelsbanken, where long-term savings products are a natural part of the customer offering.

Group structure

In addition to the parent company Handels- banken Liv, the Handelsbanken Liv Group comprises the wholly owned subsidiaries SHB Liv Försäkrings AB in Finland (SHB Liv), Handels- banken Fastigheter AB (the property company) and the dormant company Svenska RKA International Insurance Service Aktiebolag. The Handelsbanken­ Liv Group is included in the consolidated accounts of the Handelsbanken Group. This annual report only covers Handels- banken Liv.

Savings insurance with fund management and Finland is sold via the subsidiary SHB Liv, while risk insurance in Finland is sold through a branch of Handelsbanken Liv. For more information on the discontinuation project relating to the Norwegian and Finnish operation, please refer to the 'Divestment of foreign insurance operations' section.

The property company manages properties that are mainly rented by Handelsbanken and its subsidiaries. Handelsbanken Liv outsources

its insurance operations by purchasing services from its parent company, Handelsbanken. These comprise mainly IT services, insurance mediation, HR services, asset management, accounting services and reporting to public authorities. The company also purchases internal auditing services from Handelsbanken. Compensation for these services is set at ­established internal prices at Handelsbanken, based on generally accepted transfer pricing principles.

Financial performance

At year-end, the assets managed by Handels- banken Liv totalled SEK 252.1 billion (220.1). Assets managed in unit-linked insurance totalled SEK 194.1 billion (168.8), am increase that was attributable to positive net flows and value growth. The net flow for unit-linked insurance was SEK 6.7 billion (5.6). Portfolio bond insurance increased, and total assets under management were SEK 52.0 billion (45.1), while the net flow was SEK 2.3 billion (3.8). Assets in traditionally managed insurance with guaranteed interest, for which new contracts cannot be signed, fell from SEK 5.9 billion at the start of the year to SEK 5.7 billion at year-end. The net flow was SEK -0.5 billion (-0.5).

Handelsbanken Liv's profit before tax was SEK 1,479 million (881). The rise in profit is mainly attributable to an increase in financial results attributable to traditionally managed insurance.

The administration result was SEK 1,064 million (1,098). Income was at the same level as the previous year. Our expenses increased, largely due to higher costs for purchased services.

The risk result for 2023 fell to SEK 149 million (179). This result mainly comes from the mortality and sickness case results. The reduction was primarily because a large proportion of the Norwegian risk insurance portfolio had a positive non-recurring effect in the risk result for 2022.

The return in traditionally managed insurance was higher than the guaranteed interest rate, meaning that the capital contribution as at 31 December 2023 was SEK 0 million (453).

Appropriation of profits

The Board of Directors proposes that the entire amount at the disposal of the annual general meeting, SEK 11,443,148,684, be carried ­forward to the next year. The detailed proposal for the appropriation of profits is presented in note 45.

INSURANCE OPERATIONS

The business environment

Handelsbanken Liv is following the development of geopolitical tensions around the globe, and is continuously evaluating their potential effects on the company's customers and business operations. The US banking crisis early in the year and the subsequent questions about Swedish pension investments are not deemed to have affected Handelsbanken Liv as a company.

Divestment of foreign insurance operations In 2023, Handelsbanken Liv finalised the transfer of its remaining active Norwegian risk insurance portfolio. Following this transaction, completed in December 2023, only risk insurance was signed before 2008 remains in Norway, which is in run off.

The process of divesting Handelsbanken Liv's branch and subsidiary in Finland is continuing as planned. This is integrated with the process of the parent company, Handelsbanken, to divest its Finnish operations.

For further information, please see note 43.

Market and business

The company's goal is to be a market leader in savings insurance with fund management, focusing on occupational pension solutions for companies and employees. By leader, we mean that customers should think of us as the natural choice within capital, investment and insurance advice, with a product range that delivers on our customer pledge. At Handelsbanken, occupational pensions are a particular strategic focus area, with the aim being to increase our market share through customer meetings. Handels- banken Liv concentrates on providing insurance alternatives that allow our distributors to offer customers insurance products that meet their overall needs in terms insurance either for

6 HANDELSBANKEN LIV | ANNUAL REPORT 2023

Administration report

­savings or for protection in the case of death, ­illness or injury.

Today, we advise customers on insurance matters through both personal meetings at Handelsbanken's branches and online, when and where the customer chooses. There is ­substantial potential for growth through offering insurance solutions to Handelsbanken's existing corporate customers, with many of these either lacking pension allocations and risk insurance entirely, or historically having chosen to save with another insurance provider. In 2023, approx­ imately 19 per cent of Handelsbanken's active corporate customers had their occupational pension with Handelsbanken Liv.

New sales and the performance of assets under management are highly affected by the development of the financial markets, as an overwhelming part of the operations refers to unit-linked or portfolio bond insurance, where customers primarily invest in the equities mar- kets. In 2023, the economic climate was characterised by rising interest rates and high infla- tion, while external factors also contributed to concerns, uncertainty, large market movements and a low investment appetite.

An important tool in increasing growth is improving the customer experience. Customers want tips and inspiration on how to get more from their savings, in order to attain better control and oversight of their future pension. During the period November 2022 - November 2023, Handelsbanken had 1.2 million visits to the logged in pension pages in Online Banking. Among corporate customers, there were 170,000 unique visitors to the pension pages on Online Corporate Banking, an increase of five per cent compared to the previous year. The number of Pension page views on the app during the period was 6.7 million. The ongoing development of content in our digital channels gives us an opportunity to create a closer relationship with our customers. A focus area for the company is to replace older insurance sys- tems, allowing for a greater degree of digitalisa- tion. During the year, over 250,000 insurance agreements within ITP were migrated to the new insurance system, Lumera. Several initiatives were launched to improve the efficiency of the company's administration and the distribution of occupational pensions, as a means to improve our occupational pension offering. In Q3 we expanded the alternatives for digital reporting, making it easier for employers to manage their occupational pensions. When corporate customers can easily manage many tasks independently, the need for manual support and paper forms decreases.

For private customers as well, numerous new digital features were launched. When insurance agreements are migrated to Lumera, customers have a much wider range of options at their ­disposal for managing their insurance online, such as changing funds. Functionality has also been developed allowing for the digital sending

and signing of forms, as well as for entering and amending insurance agreements. The improved digital functionality enhances simplicity for cus- tomers, while also improving efficiency for advi- sors. Lumera will be implemented stepwise over the next few years, along with additional features and capabilities.

The ongoing digitalisation process enhances the customer experience by eliminating printed letters and forms for both corporate and private customers. We aim to achieve greater efficiency in the business while lowering our impact on the environment.

Handelsbanken Liv's strategy is to offer a wide range of funds within unit-linked insurance - more selectable funds and more funds linked to environmental and climate-based solutions. In 2023, the new 'Hållbar Pension' entry solution was launched, an alternative for Handels­ banken's Occupational Pension, Direct Pension, Pension for Self-Employed and ITP. Handels- banken Hållbar Pension is Sweden's first Nordic Swan ecolabelled entry solution for individual and collective agreement occupational pensions. The entry solution invests in funds that meet sustainability criteria and has an individual down- scaling or risk up to and during disbursement.

During the year, Handelsbanken Liv was

again designated as a selectable ITP option for the next five years. The company thus remains a selectable option within all collective agreement areas in unit-linked insurance. The company continues to be a valued option in the individual choice market, and has a robust ITP offering with a new entry solution and reduced fees for older ITP insurance agreements. New sales of collective agreement occupational pensions increased by 24 per cent compared with 2022. Handelsbanken Liv's share of the market for collective agreement occupational pensions is sta- ble. The combination of lower fees and a focus on sustainable investments contributes to the competitiveness of the company's offering, and good growth opportunities.

New sales of regular premiums increased by 12 per cent and continued to perform well. New sales of occupational pensions, excluding transferred capital, increased by 2 per cent. Total premiums written from occupational pensions increased by 16 per cent to SEK 4,638 million (4,014).

New sales of endowment insurance increased by 8 per cent. Repurchases of endowment insurance increased across the market as a whole, including at Handelsbanken Liv. This was based on rising interest rates and high inflation, causing housing costs to climb and, consequently, requiring more savers to realise their savings assets.

Handelsbanken Liv is one of the larger operators in the transfer market. The company's net flow increased during the year, despite fierce competition and higher levels of activity among other companies. This competition also entailed a higher outgoing flow of insurance capital to

other insurance companies, which was however largely compensated for by increased demand from Handelsbanken's customers to consolidate all their insurance at Handels- banken Liv. During the year, Handelsbanken has developed and carried out training initiatives and launched a tool aimed at ensuring advisors can provide better support and guidance to customers looking to move their collective agreement occupational pensions. In addition,

Handelsbanken­has carried out a comprehensive training drive for all occupational pension advisors, with the objective of further enhancing the expertise and quality of advisory services in this area.

An improved mortgage protection product was launched in late 2021, and sales for 2023 exhibited increasing growth. The perception of security in the wider world has been somewhat damaged, and their is a greater need for insurance to boost reassurance. In order to offer comprehensive insurance protection, the com- pany's insurance products are therefore supplemented at Handelsbanken with risk insurance from other insurance providers.

FUTURE DEVELOPMENTS AND

CHALLENGES

The business environment in which Handels- banken Liv operates is constantly changing, and there is a substantial need for efficiency improvements in the industry and among market players. Handelsbanken Liv has been focusing heavily on digitalisation with a view to enhancing customer benefit, achieving efficiency improvements in its processes and renewing the infrastructure that supports the business. The implementation of the new Lumera insurance system, which will continue over the next few years, is at the centre of these efforts.

Business models in the market are changing and will continue to face challenges with the advent of new regulations and the growing need for digitalisation. Changed regulatory requirements also call for proactive digitalisa- tion measures. There will be an intensified focus on continuously adapting our offering to meet our customers' needs and requirements, and a concerted effort to reduce postal volumes and their environmental impact.

Handelsbanken Liv is traditionally a forerunner when it comes to changing business models to improve the offering we provide to our customers. In 2001, Handelsbanken Liv was the first mutual insurance company to reform, and a few years later we were again the first to introduce the free right of transfer for all insur- ance, no matter the management form or when the policy was taken out. During the period 2020-2021, Handelsbanken Liv also abolished all transfer fees for transfers of insur- ance, including collective agreement insurance via selection centres, in order to increase transfer activity among insurance customers.

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Administration report

ASSET MANAGEMENT

Handelsbanken Liv divides its portfolio of traditional insurance policies with guaranteed interest rates into sub-portfolios based on the guaranteed rate. The capital in each sub-portfolio is managed in a separate asset portfolio. The assets are managed so that, based on the conditions for each sub-portfolio, they secure the company's insurance commitments to its cus- tomers. Each sub-portfolio is allocated the yield rate from the asset portfolio linked to it.

Handelsbanken Liv's Board establishes the company's investment policy which defines the overall framework for asset allocation. The majority of all portfolios is invested in interest-­ bearing securities. A smaller portion is invested in other assets with higher risk levels. The proportion of non-interest-bearing assets varies over time and among the various sub-portfolios.

The management portfolios are divided into three main categories:

• Insurance with an annual 3 per cent guarantee
• Insurance with a 3 per cent final guarantee
• Insurance with an annual 5 per cent guarantee.

The division of the insurance portfolio within traditionally managed insurance, based on type of guarantee, age and tax bracket was introduced in 2009. Given the development of the portfolio since then, the Board has made the decision to amend the division of the insurance portfolio based solely on the type of guarantee: annual

3 per cent guarantee, annual 5 per cent guarantee or 3 per cent final guarantee. The change came into effect on 1 January 2023.

For insurance with an annual 3 per cent guar- antee, the average return for 2023 was 5.4 per cent (-4.4); for insurance with a 3 per cent final guarantee, 7.2 per cent (-6.4); and for insurance with an annual 5 per cent guarantee, it was 5.8 per cent (-4.9).

For unit-linked and portfolio bond insurance savings, Handelsbanken Liv provides no guarantees in terms of value growth, and the policy- holder bears the investment risk. Unit-linked ­insurance customers are primarily offered mutual funds managed by Handelsbanken's fund management companies for their investments.

SOLVENCY

As of 1 January 2019, Handelsbanken Liv applies the Solvency II regulations to all insurance operations.

Solvency II regulations are risk-based regulations for establishing the capital requirement in order to ensure that insurance companies have sufficient capital to meet their commitments even under unforeseen adverse circumstances. The solvency capital requirement calculated using the Solvency II regulations includes capital to cover market risk, insurance risk, counter- party risk and operational risks.

On 31 December 2023, the solvency ratio calculated under Solvency II regulations was 2.26 (2.32).

EMPLOYEES

At the end of 2023, Handelsbanken Liv had

90 employees (104), of whom 99 per cent were employed in Sweden. Principles and processes for remuneration to executive officers and management are presented in note 17, Staff costs. At year-end, the head of the internal audit function was employed by both Handelsbanken and Handelsbanken Liv and is included in the number of employees.

CAREER DEVELOPMENT Handelsbanken Liv's strength is derived from the combined expertise of our employees. When our employees develop, so does the company. An important part of development is on-the-job learning. Competency at Handels- banken Liv involves each employee finding, using, developing and exchanging knowledge, skills and experience. Each employee is responsible for developing their own skills. Important skills include innovative thinking and being able to change mindset or patterns of activity. All employees take part in their unit's business planning process. Guided by the business plan, employees meet their immediate superior at least once a year for a performance review. This involves discussing the employee's contribution to business goals and the conditions required for the employee to perform their tasks. The talk also covers a discussion about the employee's future development and career. The dialogue results in an individual action plan which is continually followed up.

GENDER EQUALITY AND DIVERSITY Handelsbanken Liv's approach to gender equality and diversity is consistent with Handels­ banken's work in this area, centred on trust in and respect for the individual - both employees and customers. Promoting gender equality, diversity and an inclusive corporate culture should be an integral part of day-to-day activi- ties. Diversity is an important factor in creating profitability and being an attractive employer. Through an inclusive culture, we make best use of the advantages generated by diversity and gender equality. We carry out various activities to increase awareness of how social and cultural norms and values affect us every day. Handels­ banken Liv endeavours to achieve and maintain a balanced gender representation in various roles and parts of Handelsbanken Liv.

WORK ENVIRONMENT AND HEALTH Handelsbanken Liv follows Handelsbanken's guidelines on the work environment. The overall goal is to have a workplace where employees enjoy good health, develop on a personal level, and function in an optimum way. Together with their teams and trade union representative or employee representative, each manager is responsible for performing regular work environment surveys addressing several areas, including our health factors, which are based on the

Bank's culture and values. Based on the results and shared dialogue, work environment plans are then created, including activities that are integrated into the units' business plans. An ongoing dialogue between managers and their teams makes it possible to detect early signs of poor health and to ensure the work situation is sustainable in the long run.

ETHICAL STANDARDS Handelsbanken Liv has a policy on ethical

standards­ adopted by the company's Board. This policy states that the business must observe high ethical standards. Employees must conduct themselves in a manner that upholds confidence in the companies. Every year, all employees must complete e-learning modules in ethical standards and measures

to combat money laundering. All employees are responsible for their actions, professionally and in social and ethical matters.

SUSTAINABILITY AND RESPONSIBLE INVESTMENT

Handelsbanken Liv is part of the Handelsbanken Group and is thus subject to the formal sustainability reporting requirement in the Swedish Annual Accounts Act. Svenska Handelsbanken AB (publ), corporate identity number 502007- 7862, with its registered office in Stockholm, has in its Annual Report for 2023 prepared a statutory sustainability report that meets the requirements of the Swedish Annual Accounts Act. The reporting in the sustainability report covers the Group as a whole.

DIRECT ENVIRONMENTAL AND

CLIMATE IMPACT

Handelsbanken Liv conforms to the decisions made by Handelsbanken concerning its environmental work. Our ambition is to run our business in line with a 1.5°C scenario, and to achieve net-zero emissions of greenhouse as soon as possible, but by 2040 at the latest. Handels- banken Liv works systematically to continually contribute to the Group-wide climate goal.

Energy and carbon dioxide Handelsbanken Liv's direct impact derives mainly from energy consumption, business travel and transport as well as use of resources such as paper. The company is working to mini- mise the carbon dioxide emissions generated by its operations. Changes are constantly being made which, overall, are reducing environmental and climate impact. The total volume of customer documents sent out has increased by

14 per cent. This was primarily linked to one-off mailings addressing the ongoing change of sys- tems. Digital administration has increased during the year, meaning that the percentage of digital mailings has risen to encompass 73 per cent of all mailings. At the same time, the number of paper mailings decreased by 2 percentage points compared with 2022.

8 HANDELSBANKEN LIV | ANNUAL REPORT 2023