A new group organisation lays the groundwork to make it easier to be a customer in
A new group organisation is presented in June. Nordic units and a split between business areas experiencing growth and a business areas with guarantees is the hallmark of the new organization, with the business areas Customer Area Norway,
Finance. Two new Managing Directors are introduced: Staffan Hansén becomes the new head of Savings and Asset Management and Hege Hodnesdal becomes the new head of Insurance.
Storebrand's history can be traced back to 1767. The company has provided occupational pensions to Norwegian employees since 1917, the same year that Storebrand's fully-owned subsidiary SPP was established in Sweden. Storebrand Bank ASA was established in 1996. In 2006, P&C insurance was relaunched as an offering to the retail market customers and selected parts of the corporate market.
At the end of 2013, the group had 2,138 employees, compared to 2,250 at the beginning of the year. All employees of Storebrand are treated equally, regardless of age, gender, disability, religious beliefs, cultural background or sexual orientation.
STOREBRAND'S STRATEGY: Storebrand's ambition is to be the best provider of pension savings. Our most important customers are corporates with pension in Storebrand and their present and former employees. We provide sustainable solutions adapted to our customers' circumstances through our market and customer concepts.
With the recent clarifications from Europe, there have been implemented measures to ensure that products with long guarantees turn out better than what was originally intended. This eases our situation. There is at the same time no doubt that paid-up policies have a weak position in relation to the new solvency regulations.
Illustration 2: The future decline in the National Insurance – a greater need for private saving
Climate change is likely the greatest global challenge of our time. The framework for business is already changing, through stricter regulation and greater unpredictability in the ecosystem services on which we are all dependent. Population growth and resource scarcity will likely have different impacts on different industries, regions and companies, making it more challenging to do business in the coming years. However, these challenges may also represent business opportunities for companies that are efficient, well-prepared and well-positioned with smart products and services.
The Group has implemented a number of measures aimed at ensuring customers see us as an attractive choice. The commercial work is further strengthened through the establishment of the business units Customer area Norway and Customer area Sweden. The product responsibility for unit linked insurance and the responsibility for innovation and concept and product development is delegated to the customer areas in order to ensure closeness to the customers and as few levels as possible in the organisation.
Earnings from fees and administration show an increase of almost 14 per cent in 2013 compared with the previous year. The underlying reason for this growth is that the Norwegian business has recorded a solid increase in income driven by the price of interest rate guarantee / profit margin risk. In addition, other administration incomes within group pensions have also been maintained. Both elements are driven by low conversion from defined benefit to defined contribution pensions due to the market awaiting new regulations.
The Banking Law Commission proposed converting accrued rights in the defined benefit schemes into a pension holding pursuant to the new occupational pension act. These should be managed in accordance with the new regulations, at the same time as the guaranteed benefits were continued. The proposal covered both group schemes and paid-up policies. The proposal from the Banking Law Commission, and adaptations that were proposed by the Financial Supervisory Authority of Norway and Finance Norway during the consultation round, would have contributed to a better adaptation of the paid-up policies to Solvency II. However the proposal was complicated and met a lot of resistance in the public consultation round. The ministry has not followed up these parts of the Banking Law Commission's report. It means that the discontinuation of defined benefit schemes due to the transition to defined contribution pensions or a new hybrid product will be based on the issuance of paid-up policies.
In Norway greater interest rate sensitivity from the investments will give increased risk that the return for the year is below the guarantee. Risk management must therefore balance the risk of the profit for the year being negatively affected by an increase in interest rates with the reinvestment risk if interest rates fall below the guarantee in the future. Hold-to-maturity accounting of long-term bonds is a key risk management tool. Closing interest rate risk in Norway is not an available alternative. This is due to both product rules with annual guarantees and that there is not sufficient access to long bonds or interest rate swaps. The introduction of Solvency II from 1
Operational risk and compliance risk are regarded as the main risk factors for the company. The most common types of operational risk in the asset management business are errors that occur in the trading and settlement process, pricing errors, breaches of investment mandates, erroneous reporting and faults in core systems. Compliance risk is linked to compliance with legislation and regulations.
Like society in general, the company has developed in the direction of greater cultural diversity. The company received 81 points out of a possible 100 in a survey on ambition levels and work on diversity. Storebrand does not discriminate on the basis of age, gender, disability or cultural background and gives everyone access to the workplace on the same terms.
The MTI for the year recorded a total score for job satisfaction that was unchanged from 2012 for the Group's employee satisfaction index. Job satisfaction is a combination of satisfaction and motivation, which is indirectly affected by seven priority areas. The employer 's reputation among the employees has improved. As many as 90 % of the employees consider it to be valuable that the Storebrand
No injuries to people, property damage, or accidents were reported in the Storebrand Group in 2013.
Storebrand is continuously adapting to enhance its competitiveness and earnings from its business operations. Among other things, through a cost programme that aims to reduce the Group's costs by at least NOK 400 million before the end of 2014.
The maximum limits for contributions to the hybrid product are 7 per cent of salaries up to 7.1 G and 25.1 per cent of salaries between 7.1 and 12 G. At the same time as the Storting passed a new Occupational Pensions Act, it also increased the maximum limits for defined contribution pensions to the same levels. The new Occupational Pensions Act and the higher maximum limits for defined contribution pensions, entered into force on 1 January 2014.
Solvency II is a set of rules covering solvency that will apply to all insurance companies in the EEA area. It appears to be clear now that final adoption by the EU Parliament could occur in early 2014, and that the regulations will be introduced from 2016. Transitional rules will probably be introduced that will allow the difference between the value of the insurance liabilities after Solvency II and Solvency I at the time of the transition to increase the solvency capital. It will also allow a mark-up on the yield curve that is used to discount the insurance liabilities. The way in which the proposed regulations are formulated, they are somewhat better adapted now to companies that have longterm guaranteed annual returns, especially if the authorities choose to exploit the opportunities permitted by the transitional rules.
The full text of the Articles of Association can be found on the Group’s website at www.storebrand.no.
Meeting. The CEO, executive management team and the Group Legal Director participate from the management. Annual
The committee held nine meetings in 2013 and reports semi-annually on the committee ’s work to the Board of Representatives, most recently in September 2013.
Assessment of operational risks is linked to a unit’s ability to achieve goals and implement plans. The process covers both the risk of incurring losses and failing profitability linked to economic downturns, changes in the general conditions, changed customer behaviour, etc., and the risk of incurring losses due to inadequate or failing internal processes, systems, human error or external events.
The work involved in the preparation of the financial statements is organised in such a way that the Consolidated Financial Statements unit does not carry out valuations of investment assets. Instead it exercises a control function in relation to the accounting processes of the group companies.
and 6 (ASA) and in the statement on the fixing of salaries and other compensation for executive personnel, which is included in the notice of the Annual General Meeting, which is available at www.storebrand.no. Executive personnel are encouraged to hold shares in the Group, even beyond the lock-in period.
Livsforsikring AS. Grefstad previously worked as an external auditor for Arthur Andersen.
Competence in the Financial Services Industry and a deputy on the
Note 6 Remuneration to the CEO and elected officers of the company
Due to the amendment to IAS 1 Presentation of financial statements the presentation of items included in the Statement of Total
The consolidated financial statements combine Storebrand ASA and companies where Storebrand ASA has a controlling interest. A
The acquisition method is applied when accounting for business combinations. The acquisition cost is measured at fair value plus any costs directly attributable to the acquisition. Any expenses relating to the issuance of shares are not included in the acquisition cost, and are charged to equity.
When insurance contracts are purchased as part of a business combination, the insurance liabilities are recognised on the basis of the underlying company’s accounting policies. Excess value linked to these liabilities, often referred to as the value of business in force
A certain degree of judgement must be used in assessing whether impairment has occurred and the amount of the impairment loss.
Contingent liabilities are assessed in each case and will be based on legal considerations.
Any negative returns on customer portfolios and returns lower than the interest guarantee that cannot be covered by additional statutory reserves must be covered by the company’s equity and will be included in the net profit sharing and losses line.
If the total return on assets in one calendar year for a premium determined insurance (DC portfolio) exceeds the guaranteed interest, profit sharing will be triggered. When profit sharing is triggered, 90 per cent of the total return on assets passes to the policyholder and 10 per cent on the company. The company’s share of the total return on assets is included in the financial result.
Consists of products that include long-term saving for retirement with no long-term interest rate guarantees. This area includes unitlinked insurance and defined contribution pensions for private individuals and companies in Norway and Sweden, asset management and bank products for private individuals.
The company’s total risk picture is monitored continuously, using tools such as the Financial Supervisory Authority of Norway’s Riskbased Supervision and self-developed risk goals.
6. Health and P&C insurance contracts are group contracts with lump sum payments for occupational injury insurance, critical illness, cancer insurance, child insurance or accident insurance that are offered in Norway.
A new lifetime tariff (K2013) has been developed for group insurance. The tariff is based on three elements: These are the initial mortality, safety margin and future increase in life expectancy. Initial mortality is determined based on actual mortality in the insurance portfolio in the period from 2005-2009. The safety margin will take into account the difference in mortality based on income, random variation in mortality and the company's margins. The future increase in life expectancy entails that the projected life expectancy is also dependent on the year of birth. Today's 50-year-olds are not expected to live as long as 50-year-olds in 20 years' time. This factor is referred to as dynamic improvement in life expectancy. K2013 will thus be a dynamic tariff when it is introduced.
Tariffs for group life insurance and certain risk insurances within group pensions also depend on the industry/occupation, in addition to age and gender. Group life insurance also applies tariffs based on claims experience. The company’s standard tariff for group life insurance, both for life and disability cover, is based on the company’s own experience.
Since it is the immediate market changes that are shown in the tables below, the dynamic risk management for the Group's life insurance companies will not affect the outcome. If it is assumed that the market changes occur over a period of time, then dynamic risk management would reduce the effect of the negative outcomes and reinforce the positive to some extent.
Both the insurance business and the banking business are exposed to credit risk. The insurance business primarily has a credit risk relating to bonds with significant geographical and industry-related diversification, while the bank is mostly exposed to direct loans for homes and commercial property in Norway. There is no significant concentration risk across bonds and loans.
Occupational pension statutes in Norway are undergoing a series of changes in order to adapt them to National Insurance reforms. The
Bonds and other fixed-income securities - Government and government guaranteed bonds 26,374 35,951 62,325 51,879 - Mortage and asset backed securities 45,483 45,483 43,780
Derivatives: Total derivates -322 -322 - of which derivatives with a positive market value 2,211 2,211 4,057 - of which derivatives with a negative market value -2,533 -2,533 -1,356
External appraisals: A methodical approach is taken to a selection of properties that are to be appraised each quarter so that all properties are appraised at least every three years. In 2013, appraisals corresponding to about 70 per cent of Storebrand's property portfolio in Norway were obtained.
Of which premium reserve transferred to company 4,962 3,615 1) Individual life and disability, property and caualty insurance 2) Group life, workers comp. And health insurance 3) DC disability risk result Norwegian line of business
Net income held to maturity 556 -3 552 9 543 493
The pension for the employees of Nordben Life and Pension Insurance Company LTD and Euroben Life and Pension LTD is covered by a defined contribution scheme. In addition, the employees of Nordben are covered by a lump sum upon death during their period of service.
The average employee turnover rate is 2-3 per cent for the entire work force as a whole, and falling turnover with increasing age is assumed.
See the assumptions for wage growth and other assumptions that are used in the calculations in note 24.
3) The retirement age for SPP‘s CEO is 62 years old. SPP‘s CEO is covered by a defined contribution based scheme in addition to a defined benefits scheme.
7. Ensure that both the development of financial remuneration and job requirements are embedded in the employee‘s role, responsibilities and influence in the Group. Ensure that the composition and level of the components of the financial remuneration are balanced and in line with the market
Executive employees and employees who influence the Company's risk are divided into two categories with regard to financial remuneration. Executive employees for whom accounting and control functions make up a large part of their duties receive fixed salaries only.
The bonus is funded by the value created in the Group, while the allocation of the bonus is dependent upon the value created in the unit and the employee's own performance.
The maximum possible bonus entitlement is 90 per cent of the annual fixed salary. For senior employees in STB Bank, 50 per cent is the maximum.
The Chief Executive Officer and executive vice presidents are entitled to termination pay if their contracts are terminated by the Company. Entitlement to severance pay is also triggered by resignation if this is due to substantial organisational changes or equivalent situations that make it unreasonable for the employee to remain in his or her position. If the employment is brought to an end due to a gross breach of duty or other material non-performance of the employment contract, the provisions in this section do not apply.
2) NOK 31 million was classified as depreciation under operating costs.
THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE FOLLOWING COMPANIES WITH THE AMOUNTS SHOWN
Financial assets are derecognised when the contractual right to the cash flow from the financial asset expires, or when the company transfers the financial asset to another party in a transaction by which all, or virtually all, the risk associated with ownership of the asset is transferred.
2) Senior employees have a performance-related bonus agreement. 50% of the awarded bonus is paid in cash. The remaining amount is converted to synthetic shares based on the market price. These are registered in a share bank with a lock-in period of three years. At the expiration of the three-year period the value of the synthetic shares is calculated with a new market price. Half of the amount paid from the share bank, after tax, shall be used to purchase shares in
These products involve guaranteed payments upon death or disability, and a waiver of premiums in the event of disability.
ANNUAL REPORT 2013 for the group portfolio (group and individual products without investment choice) less the guaranteed return.