SPP, Sweden’s largest life insurance company and sole manager of the country’s SEK250bn (E30bn) white collar employee pension funds, is selling its SEK100bn life and investment management arm, SPP Liv, following boardroom clashes and criticism from the Swedish agency for fair trade.
The sale has already led to the resignation of Bo Eklöf, president and chief executive of SPP, who says the break up will mean SPP will be incapable of competing in the future. SPP Liv was added to the group in the early 1990’s following competitive deregulation of the labour market. However, the group has come under fire internally and externally for operating as a market monopoly and free agent.
Eklöf, says the sale of SPP Liv was a board decision: "For a number of years we have developed this competitive part of our business, whereas the original SPP business was mandated from the contracting parties in Sweden to administer their pension schemes. The contracting parties, particularly the employers federation, no longer support this line of business any longer, which is why we’ve had to split it out."
Eklöf comments that as SPP Liv was the daughter company of a monopoly, the Swedish board of fair trade branded it the dominant force in the market.
"The liaison put the company under a certain ‘observation’. This was harmful and we had to get rid of the stamp on our foreheads."
SPP Liv represents around two thirds of SPP’s group activity in terms of employees and costs. Eklöf believes the group will suffer as a result of the sell-off: "If you don’t have the support from your basic owners you can’t develop the business, so this is a rationale decision from that perspective.
"Now the mother company is going back to its business engagements of the 1970s and 1980s. Of course, finally this part of the insurance will also be open to competition and at that moment SPP will no longer be able to compete. Hugh Wheelan