The Scandinavian insurance market is no stranger to many of the issues which will be discussed in Stockholm at the biennial international seminar of the International Underwriting Association.1 Lee Coppack explains.
The Scandinavian property/casualty market has been through its own share of upheavals, notably through abortive attempts in the early 1990s to establish a major Nordic insurer but also through the impact of losses in international (re)insurance. A period of consolidation and contraction followed, and Swedish companies become more inward looking, for example, Skandia, the largest quoted company, disposed of its US reinsurance subsidiary in 1996.
The trend appears to have reversed, and in 1997 the number of insurance companies in Sweden rose by over 8%, while in the European Union as a whole, the number fell. Skandia chief executive Lars-Eric Petersson believes that conditions are now good to build a strong Nordic insurance company. “There is a good basis to build a strong insurance company which can weather a tough competitive climate,” he told a news conference, reported by Reuters. He said the company wanted to take part and actively drive restructuring in the Nordic insurance sector.
Skandia and Norway's biggest insurer Storebrand have decided to merge their non-life operations under the leadership of former Mercantile & General senior executive Hans-Erik Andersson, and Skandia announced that it was seeking a listing on the Frankfurt stock exchange. It is also preparing to list its Norwegian Vesta non-life insurance unit on the Oslo stock exchange and is considering forming a joint company for international sea and energy insurance between Vesta and Storebrand.
Other realignments are taking place: Trygg-Hansa, a member of Skandinaviska Enskilda Banken (SEB), sold its industrial and marine portfolio to the Zurich Group in 1998. The deal gave Zurich a substantial presence in the region. Then, in March 1999, SEB put the remaining non-life operations of Trygg-Hansa up for sale.While all these changes are taking place, it is worth noting that the largest non-life insurer in Sweden remains the mutual, Lansforsakrings-gruppen, which is reported by Reuters to have boosted its market share by 1% to nearly 28% in 1998.
Consolidation, therefore, is an entirely appropriate theme for an insurance seminar taking place in Stockholm. Paradoxically, the expected Swedish presence on the programme and participation in the discussion on consolidation is less likely than many other companies to be affected by the trend. Göran Thorstensson is president and ceo of Sirius International, which is comparatively sheltered because it is under the umbrella of one of Sweden's most important groups, ABB, and forms part of ABB Financial Services.
Sirius is the one Swedish company which remains active in international reinsurance. The group has branch offices in several European cities, including London, and it is the parent company of one of Bermuda's major finite risk insurers, Scandinavian Re. In London, Sirius acquired the main part of the UK operations of another Swedish company, WASA, and joined their operations.
The other speakers on consolidation, who will have more personal experience on the subject, are Bernhard Fink, chairman of ERC Frankona, Munich, and Bill Adamson, ceo of the US company CNA Re.
Taking the theme of Through the Looking Glass, the programme brings together not just insurance and reinsurance professionals from Europe and North America but also draws people from other sectors who observe the London market closely, either as a profession or as competitors.
Following the formal opening and key note address by Michael O'Halleran, president of the Aon Group, the first session is entitled How Others See Us. It asks the views of an insurance analyst, Trevor Petch of Robert Fleming Securities; risk manager Alan Fleming; Lloyd's underwriter Robert Childs of Hiscox syndicate 33 and continental reinsurer, Pierre-Denis Champvillard of SCOR.
For a broader perspective, the IUA has turned to financial journalist Hamish McRae, associate editor of the Independent and author of The World in 2020. He is to speak about the forces for change in finance in the next century.
A comparatively recent (1994) member of the European Union, Sweden has like the UK remained outside monetary union because of the strength of public opinion. However, insurers and reinsurers cannot ignore the impact of the euro, and Lord Hunt of the London law firm Beachcroft Stanleys will lead a breakout session on economic and monetary union.
Other outside speakers include Ian Dilks, chairman of the European insurance leadership team at PriceWaterhouseCoopers who together take a session on technology under the title IT- A false dawn? and Mark Hewlett, managing director European non-life of Moody's Investors Service, who is to speak on the soft market and whether it has become a permanent feature.
Turning to the industry, the IUA has chosen Michael O'Halleran and Lloyd's chairman Max Taylor as its keynote speakers, and Jim Duffy, president of St. Paul Re is billed as a guest speaker. Michael Butt of Bermuda's XL Capital will speak on the global market. Tim Carroll, the chairman of the IUA, will open the conference and give the closing address. The programme is also clearly designed to give participants plenty of time for discussion and for feedback from the various breakout sessions.
The social highlight of the seminar will be the black tie dinner sponsored by Sirius International which is being held in the hall of mirrors at the Grand Hotel. This is where the first Nobel dinner was held in 1901 and the menu will be the original Nobel dinner menu. That the founder of the Nobel prize should be the man who invented dynamite is one of the contrasts of Swedish history. Born in Stockholm in 1833, Alfred Nobel became a very wealthy man from his patent of the mixture of nitroglycerine and silica to make dynamite. In his will be left a large endowment for the prizes which still bear his name. Today, prizes are awarded in physics, chemistry, physiology or medicine, literature and peace.
Plans are under way for the centennial exhibition of the Nobel prize in 2001. The board of directors of the Nobel Foundation have recently approved a preliminary proposal for an exhibition under the tentative title of the Culture of Creativity: Individuals and Milieus. It is intended to be “a broad, interdisciplinary exhibition which will focus on the concept of creativity - illustrated by the history of the work of Nobel Laureates throughout the 20th century.” The exhibition is scheduled to open in Stockholm or possibly abroad in April 2001 and then circulate internationally to major museums and other important exhibition centres.
The evening before the conference, there is a cruise around the Stockholm archipelago sponsored by Folksam International and a less formal dinner at the Vasa Museum, sponsored by Odyssey Re.
The cruise will show off the city's exceptional geography. It is build on a series of islands in an archipelago. In the inner city alone, there are 14 islands and over 50 bridges. The whole archipelago encompasses over 20,000 islands, most of which are uninhabited.
The present peaceful, neutral stance of Sweden is little clue to the warfare that established it. In its earliest days in the mid-13th century, Stockholm was a fortress city built to defend the island dwellers against marauding seafarers. Around 1400, an attempt was made to unite Sweden, Norway, and Denmark into one kingdom, but this led to bitter strife with the Danes. In 1520, the Danish king, Christian II, conquered Sweden and in what is known as the Stockholm bloodbath, he put leading Swedish personages to death. Gustavus Vasa (1523-60) broke away from Denmark and fashioned the modern Swedish state.The history of the 1628 Vasa man-of-war, which the IUA conference participants will see reconstructed in a purpose built museum, has parallels with that of the Tudor warship the Mary Rose built by the English king Henry VIII, as the following account shows:
“King Gustav II Adolf built the largest ship ever in the Swedish navy fleet at the Royal Ship Yard, at what is today Blasieholmen, across from the Castle. He gave it his own family name Vasa. It was to be the admiralty ship in the Baltic Fleet, the force that was believed would soon dominate the entire sea. But in front of the eyes of the whole city, and all who had clambered up the nearby mountain to see it, the ship sank a few hundred metres after its launch.”2Despite importing a Dutch expert to supervise the construction, the King was deeply involved in the building and he ordered heavier and larger cannons than originally prescribed, far in excess of what the ship could support. She had simply heeled over in the wind and sank to the bottom within a few minutes. There the Vasa remained until 1961 when she was raised and restored.
The loss of the Vasa was a blow to national pride, designed as she was as a symbol of Swedish royal sovereignty and glorifying the the Swedish king and his ancestors. From her decks Admiral Klas Fleming was to have led the entire Swedish fleet as the Swedish troops sailed for Germany and a new chapter in European history.
Sweden, nevertheless, remained a major seafaring power over the following centuries with the size of its empire shifting according to alliances and treaties. Sweden emerged from the Napoleonic Wars with the acquisition of Norway from Denmark and with a new royal dynasty stemming from Marshal Jean Bernadotte of France. The artificial union between Sweden and Norway led to an uneasy relationship, and it was dissolved in 1905.
In the twentieth century, Sweden has adopted a stance of neutrality and remained neutral during both world wars, becoming known instead for its extensive system of social welfare which began with the establishment of old-age pensions in 1911.
Thus, in just a short visit, participants in the IUA seminar will get a flavour of the history of Stockholm and of Sweden. A comparatively small capital city, Stockholm is a marvellous place for walking. Provided the weather is good, a stroll through the old city on the Gamla Stan in the evening light will be very appealing following the formal dinner.
Lee Coppack is co-editor of Global Reinsurance.
1. 4-6 May 1999.
2. For a colourful account of the history of Stockholm from which these are extracts, see the holmiensis web site at www.holmiensis.net