SWEDEN - Handelsbanken says it will allow SPP policyholders who save in traditional insurance to decide the proportion of equities and guaranteed interest rate.

And SPP will decrease its own risk exposure, the bank said. The SPP life insurance concern was demutalised following a vote in 2004.

"My assessment is that by next year, SPP will be able to start paying back a large part of the shareholder contribution it received at the time of demutualization," said CEO Pär Boman.

The "new model" for traditional life insurance was unveiled at a presentation in Stockholm today.

"Customers will have a modern product with the greatest security in the market and with a fundamental guarantee, combined with a degree of choice which no other market player can offer," said Boman. The old system had several drawbacks, he said.

"Pension insurance plans are long-term agreements. They are entered into at different times, where the situation for interest rates and the stock market may vary, and then the plans have to be managed together over a long period of time.

"This forces the asset manager to make sub-optimal compromises which are sometimes clearly disadvantageous for the savers.

"Furthermore, the policyholders may themselves change their personal situation and risk profile two or three times during the life of the agreement.

"Thus this product development which gives each saver the opportunity to change and adapt the policy individually, is almost as important in a customer perspective as the right to transfer funds implemented by SPP after the demutualisation."

The bank said in a statement that the move also reduces SPP's risk exposure and makes its earnings more stable.

In June SPP named Kerstin Wahlund and Håkan Sandberg as new members of the board of SPP Livförsäkring AB.