Andrew Bibby


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Andrew Bibby is a professional writer and journalist, working as an independent consultant for a number of international and national organisations, and as a regular contributor to British national newspapers and magazines. He is also the author of a number of books.

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Profile of a chief executive:

Anders Sundström (Folksam)

This article by Andrew Bibby, in a slightly different form, was first published by ICMIF (International Cooperative & Mutual Insurance Federation) in Voice magazine, 2010

Distances in Sweden can be greater than you might think. You can drive fifteen hundred kilometres north from the bridge with Denmark near Malmö, for example, and still not run out of country. Fifteen per cent of Sweden (though certainly not fifteen per cent of the Swedish population) is above the Arctic circle .

To visit Pite å , high up on the Gulf of Bothnia, doesn't involve going quite as far as this, although the town is still located further north than Iceland 's capital Reykjavik . The town has a beautiful setting beside the waters of the Gulf. Visitors come in summer for the beaches and in winter for ice skating on the frozen lakes.

Pite å is the perhaps somewhat unlikely home town for Anders Sundström, CEO of ICMIF member Folksam. It means, he readily admits, a lengthy journey to and from work in his office at the top of Folksam's head office tower in Stockholm . “Each Sunday I commute down to Stockholm and my pied à terre, then turn and fly home again at the end of the working week to Pite å, where I live at weekends with my wife ,” he says. It's a round trip of, in total, about 1700 kms.

But living in Pite å brings its own rewards, including a chance to unwind from the pressures of leading one of Sweden 's largest insurers. “I like to apply myself to hunting and fishing, and right now I am looking forward to the autumn's moose hunting, a real high point of the year,” Anders says.

It is in Pite å that Anders Sundström began the political career which, indirectly, has taken him to the top job at Folksam. He was born in 1952 in Hudiksvall, a small town a mere 300 kms north of Stockholm , but headed north for his university degree to Umeå, where he read social sciences. He then settled further north still, becoming a Social Democratic councillor in Pite å whilst still in his twenties. He remained a councillor for fourteen years, at the same time quickly coming to the attention of the Social Democratic party nationally. He was the chair of the party in the large Northern county of Norrbotten and a member of the party's national executive committee. So it was perhaps inevitable that the next steps would be to enter parliament, becoming a minister in the incoming Social Democratic government in 1994. He was Minister of Labour for four years, moved to the Enterprise ministry in 1996 and also served for a short time as the Minister for Social Security. But in 1998 he took the decision to leave frontline politics for a new challenge, that of the business world. He returned to Pite å to head Pitedalens Sparbank, the region's savings bank, later moving to another northern savings bank Sparbanken Nord. And then, in 2004, came the move to the job of CEO of Folksam.

“I had twenty truly exciting years in politics, where I was able to work directly with issues which concerned me,” Anders says. He adds that he is still engaged in trying to make a difference to the lives people live, albeit in a new role. “I now work to provide security to our customers, in close conjunction with what society can offer. In a way, I am involved with the same things now as I was then. I am now employed by the customers, whereas during the first twenty years of my career I was employed by the citizens.”

Folksam has in fact strong links with Sweden's trade union and social movements, dating right back to its origins in 1908 when it was founded to enable agricultural and industrial workers to gain access to the protection which insurance could provide – to help right what the company has called a great injustice. These links are built into Folksam's structure and governance, with representatives from trade union confederations and the cooperative movement and other social organisations comprising the bulk of Folksam's two boards of directors (Folksam has two parallel boards of directors, one for Folksam Life and one for Folksam General. These two groups in turn are made up of a number of subsidiary businesses). Five employee representatives also serve on each Board.

These links mean that Folksam is able to differentiate itself from some of its competitor insurers by reminding customers that they are participating in a mutual. As its website puts it, “Our customers are also are owners. The profit doesn't go to shareholders, it stays within the company and benefits us all.” It has also meant that Folksam has been able to develop its customer base, by providing affinity group insurance products to trade union members and members of other social movements. Over the 102 years of its existence, Folksam has been able to put down deep roots in its home market. It estimates that it insures one in every two family homes in the country and one in every five cars on Sweden 's roads.

Nevertheless, as Anders Sundström knows, this is certainly not the time for Folksam to rest on its past achievements. Sweden itself is changing quickly. The country's enlightened approach to welcoming refugees has meant that almost 20% of the population is now of migrant origin. Folksam has responded by reaching out to these new Swedish residents, through initiatives like its innovative multilingual call centre (see Voice 65) and the development of Islamic financial products ( Voice 67). Traditional Swedish society is changing, too, with younger people rather less inclined than their parents to identify with trade unionism and other established progressive movements. The percentage of Swedish workers in unions still remains very much higher than in most European countries, but the trend is downward. Could this have an impact on Folksam?

Anders Sundström refuses to write off today's young people. “I find that young people's commitment to social issues is as strong as before, but the manner in which the commitment is expressed is changing,” he maintains. “Today one does not necessarily join a trade union or a non-profit making organisation as a way of showing commitment. Instead you might choose to join a pressure group on Facebook. For Folksam it is important to continue to be active and show that we are a company who cares about the well-being of people and of the environment and in this way be identified as an appealing company to young people”.

Folksam can certainly point to a strong record in terms of its social and environmental practice. It has long had a reputation for its work in trying to improve road safety, for example by influencing car design and car safety features. More recently it has extended its work into a wide range of other aspects of corporate social responsibility.

One of these is its pioneering work around socially responsible investment. Folksam participated directly in the development of the UN's Principles for Responsible Investment initiative in 2005, and has also been one of the key members in ICMIF's own work in this area. Currently Folksam's investment funds together total over 250 million Swedish kronor (USD 34 million).

“As a major investor, we own shares in companies all over the world. One way for us to contribute to sustainable development is through active corporate governance, laying down requirements that have to be met in companies' climate and environmental activities. In so doing we drive a development that both creates value and has positive consequences for our most important stakeholders, as for the climate and the environment,” Anders Sundström says.

He adds that this work can on occasions be quite a challenge. Last year, Folksam attended 35 AGMs of companies it invests in and asked specific questions about environmental policies. It also took a stand against disproportionately large directors' and management bonuses. A year earlier, it issued a public letter to a number of male-dominated companies, encouraging a more enlightened approach to gender equality. Where this sort of pressure does not achieve the desired effect, Folksam is prepared to disinvest: holdings in two companies were disposed of in 2009, for this reason. However, often the approach does bring an effect: Folksam talks, for example, of how it encouraged the international security company G4S to sign a global agreement on labour practice with an international trade union, and how it help persuade the multinational Veolia to review its construction work in Israeli occupied East Jerusalem.

Folksam also aims to practise what it preaches. Its work on sustainability has been particularly noteworthy, and the company was the first in Sweden to adopt a carbon neutral approach to its operations.. Folksam senior staff took an active role in the production of ICMIF's recent report on sustainability, launched at the Toronto conference.

Environmental and social issues such as these, as well as other issues where Folksam takes a stand such as anti-corruption and human rights, link directly with Folksam's historic links to the country's progressive movements. But there is a direct business benefit as well. Folksam's expressed view is that companies which take a lead on issues such as these will be the winners of the future. As Anders Sundström puts it, “Increasing numbers of customers demand that the company they choose is socially responsible. CSR can also contribute to improved business.”

Clearly the business side must also be got right. One major strategic change which Anders has overseen during the past few years is the way that the different parts of the Folksam family interrelate. Previously, different companies within the group often developed and marketed similar products relatively autonomously from each other. Now the aim is to focus on the different types of business, irrespective of which company within Folksam is involved. At the same time, central services have been developed to service the whole Folksam group, in areas such as HR, IT, claims, accounts, finance, corporate services and communications.

Folksam has also traditionally related to its customers on a geographical basis, according to where in the country they live. This approach may well have been appropriate when insurance was primarily bought and sold through local offices, but it is clearly much less relevant in the internet world. “We are going to change from a geographical organisation to an organisation driven by function,” Anders says. “Until now, having both a geographical and a function-orientated approach often led to resource conflict and decision inertia.” Centralising management around clear functions is helping to improve both sales and claims handling, he maintains. “The objective of our business strategy is to create an organisation that can use the resources and channels that we have in order to meet our customers' demands.”

Folksam is able to reach customers through various distribution channels. One aspect of the trend towards decreasing trade union membership is that unions are becoming correspondingly keen to be able to offer their members added value. Folksam has an extensive range of products available which it makes available through this route. Another increasingly important route to customers is through Swedbank, the national bank which is linked to the savings bank network in the country. Folksam holds close to 10% of the shares in Swedbank, making it the largest separate shareholder. Anders Sundström himself serves as one of Swedbank's non executive directors. “Our investment in Swedbank is seen as long-term. We are not going to establish nor acquire a bank of our own, but we wish to benefit by a close collaboration with Swedbank and local savings banks in Sweden . There are many areas in common where we can cooperate, both within production and within sales,” Anders explains. Some of Folksam's non-life insurance products are sold via Swedbank using the Swedbank brand.

Folksam has traditionally played an active role both in ICMIF and in the European mutual insurance federations, now AMICE, and has also worked closely with other European mutuals through the Euresa tie-up. This internationalist perspective gives Anders Sundström a vantage point to assess developments more generally in the mutual and cooperative insurance family. However, for the present at least, he sees Folksam's future as focused directly on the home market. “The latest financial crisis showed that big is not always beautiful. With regards to property and casualty insurance for households, it is difficult to see the synergy in collaboration across borders. This is because each country has its own welfare model and P&C insurance is principally based on national legislation and the welfare model. The same applies to the pension system, which looks very different between countries. Consequently I do not see a merger of mutual companies across borders,” he comments.

He is comfortable, too, at the way in which Folksam will cope with Solvency II. “We think that it is good that a tougher set of rules will place higher demands on insurance companies' management of risk. We see no problem in meeting the Solvency II conditions,” he says.

It's a position of strength for which Anders himself can claim some of the credit. When he took over the reins in 2004, Folksam was in a relatively difficult situation. One of his proudest achievements, he says, is having been able to build up a really strong property and casualty insurance company. “Today, Folksam P&C is a healthy and highly competitive company, which feels tremendously good,” he says. It makes all those journeys commuting down from Pite å well worth while.

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