Stockholm (NordSIP) – 2023 was a difficult year for Alecta, Sweden’s largest pension fund. A number of bad investments and a controversial hire undermined the reputation of the pension fund. Now, an audit of the firm has cleared executives and board members of any personal liability in the troubles of the last year.
Trouble at Alecta started brewing in the aftermath of the bankruptcy of Silicon Valley Bank (SVB) during the first quarter of 2023. Alecta reported an exposure to SVB of just under SEK9 billion, equivalent to 1.8% of its SEK500 billion equity portfolio at the time. There were concerns that Alecta’s investment strategy had failed and that the company had suffered from its inability to deal with the fact that its CIO, Henrik Gade Jepsen, had been on long term sick leave caused by complications from a Covid infection. These losses led to a number of changes at the top.
First, on April 4th, Alecta’s Head of Equities, Liselott Ledin, was replaced by Ann Grevelius, the former CIO of SEB. By April 11th, it was the turn of CEO Magnus Billing to leave, replaced in June by Peder Hasslev. To turn a page, Alecta also hired Pablo Bernengo as its new CIO at the start of August, followed by the appointment of Magnus Tell as Head of Equities one month later. By October 2023, it was the turn of Alecta’s Board’s Chair, Ingrid Bonde, to leave, starting a search for a new Chairperson, which culminated in the hiring of Carina Akerstrom. A month later, William McKechnie, general counsel and head of Legal, Purchasing and Sustainability was also let go.
Meanwhile, trouble at home continued to cast a shadow on Alecta. During the years of low-interest rates following the Great Recession 2007-09, investors were forced to consider investment opportunities that had been heretofore unexplored. Real estate offered very appealing returns so many investors turned to this sector. Alecta was no exception and invested SEK49 billion (4% of Alecta’s total assets under management) in Heimstaden, a Nordic real estate company. However, with the rise of interest rates, since the start of the war in Ukraine and the associated rise in inflation, real estate companies which tend to be leveraged or exposed to indebted homeowners, found themselves struggling. By September 2023, Alecta’s CEO noted that the return on these investments had stopped being competitive and the Swedish financial services authority, Finansinspektionen (FI), began investigating Alecta’s investments in Heimstaden. Media reports at the end of 2023 noted that several managers at Alecta responsible for investments in Heimstaden had subsequently been employed at the company. Alecta had to accept a 25% writedown in the value of its Heimstaden investment in the fourth quarter of 2023*.
Alecta’s woes continued into 2024. At the beginning of March, newly appointed CEO, Carina Akerstrom resigned after less than a month in her role. Akerstrom’s hiring had already been preceded by some controversy. She was only selected after the previous choice, Lars Rohde, had to be abandoned due to having previously accepted a position that was incompatible with being Chair of the Board of Alecta.
The announcement of the internal audit’s conclusion on personal liability for the losses experienced in 2023 was made on the occasion of the publication of Alecta’s 2023 Annual Report. In a February preview of 2023‘s results, Hasslev commented that “2023 was a very turbulent year that created a significant crisis of confidence for Alecta. We have implemented a number of measures, but are fully aware that it will take time and require hard work to regain the customers’ trust”.
*See page 5 of Alecta’s 2023 Annual Report.
