From the CEO

CEO's statement AMF Annual Report 2015

Johan Sidenmark, vd AMF

Dear customer,

As an AMF customer, you should know that we work for you. AMF is run on mutual principles, which means all our profits are returned to our customers. Our owners, the Swedish Trade Union Confederation (LO) and the Confederation of Swedish Enterprise, have appointed AMF as a non-choice company in the SAF-LO collective segment. This means we take care of pensions for those of you who do not decide how your pensions are managed yourselves. But you can also choose us actively. Regardless of whether you have decided to engage in your pension savings or not, our mission is to manage your pension based on your needs and in a responsible manner.

156,000 new customers joined us in 2015, many of them from other pension companies and banks that decided to stop offering occupational pensions to privately employed people. The fact that charges have been under pressure within the SAF-LO contract segment, simultaneous with pension amounts being fairly low within blue-collar segments, may be the explanation for some companies no longer being interested in providing these products and services. Our new customers are are helping us secure further economies of scale and the potential to reduce our charges still further in future.

The past year was unique in Swedish economic history. After a number of years of low interest rates, Sweden experienced negative interest rates for the first time. But in the somewhat longer term, low interest rates do present challenges for the pension sector. Firstly, fairly secure investments in bonds will generate low returns ahead, and secondly, the value of other assets may decrease if and when interest rates start to rise. So far, this has been positive for your pension savings because it has contributed to higher values of shares, property and bonds. AMF has taken a range of measures to address these challenges. We increased our investments in property, including substantial investments in Norwegian and Finnish property. Property generates fairly stable returns, and its value is not as sensitive to interest rate fluctuations as bonds. We also made investments in two wind power plants in the year, which we expect to generate stable cash flows over 20 to 30 years, which fits well with pension investments. The fact that it also contributes to realigning our energy system to less dependence on fossil fuels is an extra positive.

The past year has also seen a debate regarding Swedish corporate social responsibility. There are growing demands on businesses to report on their values and how they operate in practice. AMF is one of the largest shareholders on the Stockholm Stock Exchange and bears significant responsibility for pursuing these issues. We discuss corporate social responsibility directly with companies. We present our views each year after the season of company annual general meetings in our report on ownership governance. Questions regarding corporate social responsibility are just as important in our wholly owned subsidiaries as in part-owned companies. We put a sharp focus on preventative questions of values and conduct. Despite this, it was necessary for us to react in one of our part-owned companies, with additional scrutiny of operations and changes to management resulting. We've learned several lessons from this process, which we will bring into our ongoing ownership work. In the same way as setting more stringent standards on the companies we own, we know that our customers and owners also have growing expectations of us and our operations in terms of responsibility and clarity. This is why we continued the process of us reinforcing our sustainability work last year.

AMF has been supporting the UN Global Compact and its principles on human rights, labour, the environment and anti-corruption since 2014. This is also reflected in the standards we set for our suppliers. In the year, we improved the processes we use to work with them on these questions. We also implemented a process to ensure equal opportunities in recruitment, and processes for reusing and recycling AMF's leased IT equipment. Since 2015, our asset management operation has been picking foreign shares of those companies that are global top performers in sustainability, as has AMF Fonder (investment funds) from 2016. We have measured our carbon footprint, both in our operations, but also in our Swedish and foreign shareholdings. We view measurement as the first step to sharpen companies' focus on their CO2 emissions.

We want sustainability to be an issue that permeates the whole of AMF's business, and benefits all our customers, not just a few individual products or for those customers that have made active choices. In this context, we believe we differ from many other pension managers.

I hope that what we're doing at AMF will help create a better pension and better world for current and future generations of pensioners.

Johan Sidenmark
Chief Executive Officer Stockholm,

Sweden, March 2016