Skandia Insurance Company, Ltd.

Sveavagen 44
S-103 50 Stockholm
Sweden
Telephone: +46 (08) 788-1000
Fax: +46 (08) 788-3080
Web site: http://www.skandia.com Public Company
Incorporated: 1855
Employees: 7,200 ( 2001 est. )
Sales: SKr 198 billion ( US $ 18.6 billion ) ( 2000 est. )
Stock Exchanges: Copenhagen Frankfurt London Stockholm
Ticker Symbol: SDIA
NAIC: 524113 Direct Life Insurance Carriers ; 525120 Health and Welfare Funds ; 524114 Direct Health and Medical Insurance Carriers ; 524126 Direct Property and Casualty Insurance Carriers ; 523930 Investment advice Since its establish in 1855, Sweden ’ s Skandia Insurance Company, Ltd. (Fdrsdkringsaktiebolaget Skandia in Swedish ) has grown from a small fire and life sentence policy company to that nation ’ s top insurance company and fiscal services group, operating in more than 20 countries global. Skandia is headquartered in Sweden, but as of 2002, most of its business is conducted internationally. The company was among the seven firms listed on the Stockholm Stock Exchange when it opened in 1863, and in 2002 it is the only one of those original companies placid listed there. While Skandia is still involved in the insurance business—selling and handling biography, non-life, and pension insurances primarily—the company has shifted its independent focus to fiscal services, offering loans, long-run personal savings products, mortgage loans, savings products for bank cardholders, fiscal and gamble analyses, and new company development. As of 2000, Skandia leads the universe in sales of unit-linked assurances, and the company achieves sales of SKr 198 billion ( US $ 18.6 billion ), a company record. These traditional measures of success are not the merely by which Skandia measures itself : since 1994 the company has supplemented its annual reports with accountings of its “ intellectual capital ” —employee cognition and expertness and early intangible assets—and is considered a initiate in the movement to quantify such assets.

Early Days: 1850s-1890s

Skandia was established in 1855 as a blend insurance company called Skandia Group Insurance Co. Ltd. by Carl Gustav von Koch when he acquired a series of small policy companies throughout Sweden. In January 1855, Sweden ’ s King Oscar I granted Skandia a concession to become the state ’ sulfur first life assurance ship’s company and nationally fire indemnity party. Its first offices were in a three-room apartment at Mynt-torget 1 in Stockholm ’ s Old Town, adjacent to the Royal Castle. early caller documents describe its business as “ life sentence assurance and fire policy related therewith. ” As european club became increasingly industrial, larger numbers of people became aware of a motivation for fiscal security system for themselves and their families, sparking a wide interest in life policy. Skandia benefited greatly from these fresh developments and the caller expanded quickly during those early years. Skandia was soon operating internationally with offices in Christiana ( now known as Oslo ), Copenhagen, Hamburg, and Rotterdam, and had meaning operations in St. Petersburg, Russia. Skandia ’ s standard shares began trading publicly for the beginning prison term on February 4, 1863, with the opening of the Stockholm Stock Exchange. By 1889 the company ’ s animation assurance business included 7,000 policyholders. Most of these policy-holders were middle-class men ; however, wage-earning people and women were showing a growing interest ampere well. The company introduced accident and disability policy in 1890, and had expanded to 50 employees .

A New 20th Century

Skandia ’ s robust expansion continued into the twentieth century. In 1900 the caller established operations in the United States and became the first base non-British foreign insurance company to set up clientele there. At the dawn of the century, the company recognized that it could reduce the major risks involved with such disasters as the nineteenth hundred ’ s great city fires by reinsuring fire premiums. As a solution, most of the company ’ south premium income was soon resulting from sales of arouse indemnity. ironically, it was the U.S. expansion and the increase focus on fire insurance that caused the company to suffer one of the greatest losses in its history with the 1906 San Francisco earthquake and fires, which resulted in the loss of 3,000 lives and over 28,000 buildings. The losses caused by the earthquake were offset by the benefits the company enjoyed as a solution of the advances made in Sweden ’ s social legislation at the hands of the monarch Oscar II and Gustav V. Besides progressive laws concerning factory conditions, voting rights, and working hours for women and children, Sweden adopted a statutory social insurance dodge during this fourth dimension. occupational accident indemnity and pension insurance became obligatory in the first decades of the twentieth century. Skandia became a pioneer in centrifugal insurance, writing its first policy in 1920, about a full ten before third-party drive liability insurance and vehicle damage insurance were mandated by jurisprudence. In 1938 the company introduced home insurance—an invention which enabled policyholders to hold a single policy that covered fire, burglary, flooding and liability policy, with one premium and one due date .

Modern Skandia: 1950s through 1980s

Sweden ’ mho neutrality during the two worldly concern wars buffered the company from some of the damages suffered by early european companies, particularly during World War II, and the company began the second half of the twentieth century in a lot the same way it had spent the inaugural half—with rapid expansion and growth. In 1953 it entered the south american market with a speculation in Colombia, and in 1955 made its first base foray in Asia with an mathematical process in India. The 1950s besides marked a technological advance for Skandia—in 1957 it used a computer for the first time—the IBM650 Magnetic Drum Calculator, which is now on display at Stockholm ’ s Museum of Science and Technology. Skandia experienced a “ rebirth ” in the 1960s. At the begin of the ten, the caller purchased liveliness insurance company Thule ( which had been established by the grandfather of Olof Palme, Sweden ’ south late prime minister ). Skandia followed that purchase with the amalgamation of five companies—which originally consisted of 53 little swedish indemnity companies—and the fresh Skandia group was introduced in 1964. The company simultaneously unveiled its umbrella logo, which remained the caller symbol in 2002. Skandia began the 1970s with more expansion, opening an office for international reinsurance in Australia. In 1971 the company renamed its subordinate Thule Skandia Liv, creating a separate, but wholly owned common indemnity party. besides in 1971, the company shut down its India operations when that country nationalized its insurance industry. Skandia introduced child insurance in 1974. This indemnity provided recompense for disability or handicaps—regardless of cause—for children up to age 20. In 1979 the company established Skandia Life UK in London. This party was one of the first to sell unit-linked pension indemnity ( besides known as variable annuity ) —a form of indemnity that lets the policyholder invest a helping of the premium in a diverseness of investment alternatives—in the United Kingdom. Skandia ’ sulfur growth continued unabated during the 1980s. In 1986 the company acquired the share capital of Almendahl Investment Co. and Internationell Assurans AB. It besides began a series of very estate acquisitions with 20 percentage of the shares in Fastighetsbolagets Hufvudstaden and the majority of the shares in Fastighets AB Stockholm Badhus. In 1987, Skandia opened a member fiscal services ship’s company, American Skandia Life Assurance, in Shelton Connecticut. The new caller implemented innovations that would be late adopted throughout the fiscal services plain : it worked with external money managers to help it remain indifferent, and it sold its products wholesale to brokers rather than to a net of distributors. american Skandia ’ mho business flourished, and by the year 2000 had more than US $ 36 billion in customer assets. Skandia acquired Skandia International and Vesta-gruppen A/S, Norway in 1988 ; and in 1989 it acquired National Insurance & Guarantee Corp., Spain ’ south Skandia Comp de Adm Immobilaria, the Netherlands ’ Argo Properties, and Reinhold International Properties in London, the United Kingdom, in Madrid, Spain, and in Lisbon, Portugal. besides in 1989, the company ’ randomness shares were listed on the Oslo Stock Exchange ( Skandia would be delisted from that central in 1995 ). In 1990 the company once again benefited from governmental changes when Sweden adapted its insurance industry legislation, allowing Skandia to introduce unit-linked assurance in its base area. That year, the company ’ sulfur shares were listed on the London Stock Exchange .

Development of the Intellectual Capital Concept

By the early on 1990s, Skandia was heavy invested in real estate, beginning with its acquisitions in the mid-1980s, and during that fourth dimension the swedish substantial estate of the realm market suffered a collapse. Between the liabilities of its policy contracts and the devaluation of its kingdom assets, on composition, Skandia appeared to many analysts to be in good trouble. To the company, however, the future looked thoroughly : it still had fantastic assets in its people, its customers, and its products. “ Within Skandia, processes that produce value for customers, shareholders, and the staff are carried out on a daily basis. many of these are.invisible, ” wrote CEO Bjorn Wolrath, “ Nevertheless, they are advanced, and they create value. ” Skandia felt that the traditional ways of fiscal report did not allow the party to tell its fully floor. “ We needed a way to explain that we had a batch more rate than just very estate of the realm, ” remembered Scott Hawkins of American Skandia .

Company Perspectives:

Our vision at Skandia is a declaration of our interest in helping people achieve their goals for quality of life. Our products and services enable people to invest and build up the financial resources they need to make their dreams come true. In the capitulation of 1991, Skandia hired Leif Edvinsson, who had an M.B.A. from the University of California at Berkeley and a background in bank, as its first—and, indeed, the corporate world ’ s first—director of intellectual capital. Edvinsson and others at Skandia developed a means by which to measure a party ’ sulfur intangible value, or its intellectual Capital ( IC ). Skandia defined IC as the sum of “ homo capital ” such as employee competence, expertness, and cognition, and “ structural capital ” ( software, customer lists, trademarks, and thus on ). Edvinsson felt that the respect of a company ’ sulfur intellectual assets far exceeded the value of real assets that normally appear on a poise sheet. By developing sophisticate tools to measure IC—such as its Dolphin Navigator and Skandia Intellectual Capital Index—Skandia was able to demonstrate how the company ’ s cognition could be converted into respect. In 1993, Skandia took the hypothesis one footstep further and began supplementing its annual report—which reports on the company ’ s traditional assets—with an IC report. This report quantified Skandia ’ sulfur IC, and made forecasts on how likely the party was to meet its strategic goals based on those quantifications. The hypothesis proved highly successful : between 1993 and 1999, Skandia ’ s share price quadrupled. Skandia was the first company to report on its IC in this manner, though many companies soon began emulating the approach. Edvins-son left the ship’s company in 1999, but Intellectual Capital remained a cornerstone of Skandia ’ south corporate doctrine into the early years of the twenty-first century .

A New Focus for a New Millennium

Over the course of the 1990s, Skandia continued its custom of expansion, and by the end of the ten had operations in more than 20 countries around the world, including Chile, the United Arab Emirates, China, and Poland. That decade besides saw a major shift in the direction of the company. For 135 years, Skandia had focused on the insurance clientele ; in the early on 1990s, the company saw greater likely in the fiscal services industry and began to shift its core business in that direction. “ The realization at the company was that growth comes from vigorously seeking out new market opportunities quite than calculating the market share of markets you ’ re already in. So we transformed Skandia from an old indemnity company into an innovative fiscal services organization, ” said Leif Edvinsson in 2000. Skandia made this transformation through a series of sales and acquisitions over the course of the ten, and by growing its fiscal services business unit of measurement ( Skandia AFS ). Skandia AFS adopted a modern occupation model, setting itself up as a jobber of fiscal services with a broad range of products based on external funds management. These products were then sold by a sales force of carefully selected and discipline independent fiscal advisors. The fresh model proved highly successful : in 1990, Skandia AFS accounted for only 12 percentage of the company ’ mho entire income. In 1996 it represented closely 50 percentage ; a year later, that full was 70 percentage, and Skandia was garnering praise in Europe and the United States for the lastingness of its products. The party became a ball-shaped Fortune 500 party in 1997. besides in 1997, Lars-Eric Petersson took over the function of CEO from Bjorn Wolrath, and continued steering the company in the fiscal services guidance. When the company ’ south core profits doubled in the first quarter of 2000, he declared, “ the restructure of the Skandia group into a pure-play savings and assets management company is complete. ” In 2001, Skandia sold SINSER Holding A.B. to Aon Corporation, shedding the stopping point of its gamble management confer services and property/casualty policy operations. Despite its successes, Skandia was not immune from the economic troubles of the early twenty-first hundred. After a vertex in the first half of 2000, the world ’ mho stock markets experienced sharply falling prices—and the United States ( where Skandia had meaning interests ) was peculiarly hit hard. Skandia ’ s sales in Sweden dropped 10 percentage, its growth in modern markets slowed, and its sales fell by 37 percentage. CEO Petersson, while regarding the downturn as an economic “ blip, ” quite than a expression of ship’s company helplessness, however responded with a series of cost-cutting measures that included a 13 percentage reduction in its U.S. work force and an aggressive reduction in operate expenses. The company besides sold its asset management operations to Den Norske Bank in 2002. “ The elongated duration and severity of the grocery store pullback, along with the difficulty in predicting the clock of its apogee have led us to these hard decisions, ” Wade Dokken, CEO of America Skandia said in 2001 .

Key Dates:

1855:
The company is founded in Stockholm, Sweden, as Skandia Group Insurance Co. Ltd.
1863:
Skandia

s stock is listed on the Stockholm Stock Exchange.

1890:
The company introduces accident and disability insurance.
1900:
Operations in the United States are established.
1920:
The company introduces motor insurance.
1938:
Home insurance, a single policy covering fire, burglary, flooding, and liability is introduced.
1953:
Operations in Colombia, South America are established.
1955:
The company establishes operations in India.
1957:
The company begins to computerize its operations.
1964:
The company acquires Thule, merges five other companies, reorganizes, and unveils its umbrella logo.
1974:
Child insurance is introduced.
1987:
American Skandia Life Assurance opens in Shelton, Connecticut.
1990:
Skandia is listed on the London Stock Exchange.
1993:
Skandia supplements its annual report with its first Intellectual Capital (IC) report, which quantifies the value of the company

s human capital.

2000:
Skandia CEO Lars-Eric Petersson declares that the restructuring of Skandia into a savings and assets management company is complete.

even with these economic difficulties, Skandia had reason to be optimistic for its prospects in the new millennium. In the ship’s company ’ s 2000 annual report and its third-quarter 2001 interim report, CEO Lars-Eric Petersson pointed to several factors that indicated a healthy future for the company : the pass of social security system systems in many countries and changes in the labor market were resulting in the necessitate for more individual savings. additionally, Skandia had no indebtedness claims resulting from the events of September 11, 2001—such claims had a meaning impact on the insurance industry—and the party ’ s global stress insulated it from the worst effects of the decline in the U.S. market. The company besides promptly launched a issue of newly products in reception to the new economic climate. “ Our rapid-response business model is our persuasiveness in churning times, ” wrote Petersson in the company ’ s September 2001 interim report. He continued, “ The ongoing process of refining our business activities, product development, and distribution military capability creates solid opportunities for the future. ”

Principal Divisions

Americas ; Europe ; UK ; Asia Pacific .

Principal Operating Units

global Business Development ; Global Funds ; Offshore .

Principal Competitors

Allianz ; AIG ; Generali .

Further Reading

“ About american Skandia, ” January 30, 2002, http://www.newcentury newdeal.com. Bender, Yuri, “ Skandia Goes Back to Basics, ” The European, May 9, 1996, p. 22. Bolton, Norah, “ Your Organization ’ s Most significant Asset, ” The Canadian Manager, Winter 1996, pp. 25-26. Bradford, Michael, “ Deal Makes Aon Top Captive Manager, ” Business Insurance, August 13, 2001, pp. 1, 27. Bukowitz, Wendi R., and Gordon P. Petrash, “ Visualizing, Measuring and Managing Knowledge, ” Research Technology Management, July/August 1997, pp. 24-31.

Cariner, Stuart, “ 1 + 1 = 11, ” Across the Board, November/December 2000, pp. 29-34. ——, “ The Swedes Are Coming, ” Across the Board, June 1999, pp. 31-35. “ Commission Clears Sampo/Varma-Sampo/Skandia/Storebrand Venture, ” European Report, December 22, 2001, p. 362. Deering, Ann, “ The Insurance Professional in a virtual World, ” Risk Management, November 1995, p. 37. Duffy, Daintry, “ Keeping Score, ” Performance Management and Positive Reinforcement, January 31, 2002, hypertext transfer protocol : //www.p-manage-ment.com/articles/2016.htm. Edvinsson, Leif, and Michael S. Malone, Intellectual Capital: Realizing Your Company’s True Value by Finding Its Hidden Brainpower, New York : HarperBusiness, 1997, p. 240. “ european Report : Commission Clears Diligentia/Skandia Life Insurance, ” European Report, May 17, 2000, p. 1. “ FS Skandia, Storebrand ASA AND Pohjola-Yhtyma Notify New Life Insurance Company, ” European Report, July 17, 1999, p. 1. Galagan, Patricia A., “ Strategic Planning Is Back, ” Training & Development, April 1, 1997, pp. 32-36. Garrity, Mike, “ Skandia Adopting Novel Distribution Plan, ” Mutual Fund Market News, May 10, 1999, p. 1. Gerwig, Kate, “ Bandwidth : Skandia Seeks Network Insurance, ” InternetWeek, January 19, 1998, p. 33. “ Great Minds Write Alike, ” Fast Company, April 1, 1997, p. 44. Haapaniemi, Peter, “ Intellectual Capital, ” Chief Executive, January/February 1997, p. 59. “ Hafnia Humbled, ” The Economist, April 18, 1992, p. 78. Hibbard, Justin, “ Cover Story : cerebral capital, ” InformationWeek, February 22, 1999, p. 50. Hobday, Nicola, “ Den Norske Bank Buys Skandia Asset Management, ” The Daily Deal, January 8, 2002, hypertext transfer protocol : //www.TheDeal.com. Icon Group International, Inc. Staff, Forsakrings Ab Skandia: International Competitive Benchmarks and Financial Gap Analysis, San Diego : Icon Group International, Incorporated, 2000, p. 24. Icon Group International, Inc. Staff, Forsakrings Ab Skandia: Labor Productivity Benchmarks and International Gap Analysis, San Diego : Icon Group International, Incorporated, 2000, p. 20. Kielmas, Maria, “ Skandia Rumors Grow, ” Business Insurance, September 1, 1997, pp. 69-70. “ The Knowledge Gurus, ” New Statesman, September 27, 1999, p. 21. LaBarre, Polly, “ How Skandia Generates Its Future Faster, ” Fast Company, December 1, 1996, p. 58. ——, “ The Rush on Knowledge, ” Industry Week, February 19, 1996, pp. 53-55. Leavitt, Wendy, “ Technology & profit : Crunching More than the Numbers, ” Fleet Owner, October 1, 1998, pp. 51-55. Maglitta, Joseph, “ Smarten Up !, ” Computerworld, June 5, 1995, p. 84. Melymuka, Kathleen, “ Showing the Value, ” Computerworld, March 27, 2000, p. 58. Merline, Kimberly, “ ‘ Leading Lights ’ Interview with Leif Edvinsson, ” Community Intelligence Labs, November 1997, hypertext transfer protocol : //www.co-i-l.com. Moberg, Gunnar, “ How Skandia AFS Defines and Grows Its Customer Base, ” Managing Service Quality, 1996, p. 24. moore, Michael, “ insurance : Two Claimants for No. 1 in variable Annuities, ” American Banker, September 14, 1999, p. 10. Naiman, Linda, “ Vision Quest : Transforming the Way We Live and Work, ” Creativity at Work, ( Health Work and Wellness Conference proceedings ), October 1, 1997, hypertext transfer protocol : //www.creativityatwork.com. “ Nordic insurance : trash over Skandia, ” The Economist, January 18, 1992, p. 82. Racanelli, Vito J., “ european trader : Singing the Earnings Blues, ” Barron’s, November 5, 2001, p. MW12. Roos, Johan, Goran Roos, Nicola C. Dragonetti, and Leif Edvinsson, Intellectual Capital: Navigating in the New Business Landscape, New York : New York University Press, 1998, p. 208. Simon, Emma, “ Personal Equity Plans Guide : charge of the Multi-Pep the Investment Industry Is Divided about the Rapid Growth of Umbrella Funds and the Price You Pay for Them, ” The Sunday Telegraph, February 28, 1999, p. 67. “ Skandia Adds Subordinated Feature to $ 800m Debt Shel, ” Euroweek, December 12, 1997, p. 8. “ Skandia Increases Pohjola Stake to 10.9 %, ” European Report, January 5, 1996. p. 1. “ Skandia Sells Two Subsidiaries, ” European Report, September 16, 1998, p. 1. Stewart, Thomas A., and Stephanie Losee, “ Your Company ’ s Most valuable Asset : intellectual capital, ” Fortune, October 3, 1994, p. 68. Strassman, Paul A., “ Intelligence in Question, ” Knowledge Management, October 2000, hypertext transfer protocol : //www.destinationcrm.com/km. ——, “ Behind the Hype, ” Computerworld, September 4, 2000, p. 4. “ Sweden, ” Microsoft Encarta Encyclopedia, Redmond, Washington : Microsoft Corporation, 1999. “ Sweden ’ second Spat, ” The Economist, July 9, 1994, p. 78. Syedain, Hashi, “ A Helping Handicap, ” Chief Executive, May 2001, pp. 20-21. Tapsell, Sherrill, “ Making Money from Brainpower : The New Wealth of Nations, ” New Zealand Management, July 1998, pp. 36-43. “ Up the Fjord, ” The Economist, August 29, 1992, p. 70. Weiss, Ruth Palombo, “ Recipe for Innovation, ” Training & Development, June 2001, pp. 32-33. Wormuth, Diana W., “ Scandinavian Highlights : Insurers Open to Possibilities, ” Best’s Review, October 1996, p. 22.

——, “ scandinavian Market Reflects Consolidation in Europe, ” Best’s Review, February 1997, pp. 24-26. Zimmerman, Eilene, “ What Are Employees Worth ?, ” Workforce, February 2001, p. 32. —Lisa Whipple

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